- USD/CAD struggles around eight-day low, carries the previous day’s weakness.
- WTI strength, broad US dollar weakness and mild risk-on exert downside pressure.
- Recently mixed headlines question the bears ahead of the US PMI data.
USD/CAD extends the week-start losses while declining to 1.3510, down 0.08% on a day, amid the Asian session on Tuesday. The loonie pair remains weak after posting the biggest losses in three weeks. The reason could be traced from broad WTI strength and upbeat market sentiment. In doing so, the pair pays a little heed to downbeat comments from the BOC Governor Macklem.
WTI recently filled the gap below the early-March low surrounding $41.20, up 0.65% on a day at $40.85 now. The energy benchmark recently gained momentum amid sluggish inventories and rig counts as well as amid the global producers’ supply cut accord. Also favoring the black gold’s rise could be the gradual reopening of the global economies after the coronavirus (COVID-19)-led lockdown.
On Monday, the recently appointed BOC Governor Tiff Macklem said the central bank expects more coronavirus outbreaks as the economy reopens. Though, markets paid a little heed to the update amid broad US dollar weakness.
The greenback, on the other hand, suffered from downbeat housing data jostling with a strong Chicago Fed National Activity Index. Also weakening the US currencies could be the risk-on momentum that favored Wall Street and the US bond yields at the start of the week.
Recently, the market’s trading sentiment ignored the headlines suggesting an escalation of the US-China tension as well as higher virus figures from Beijing. In doing so, the US 10-year Treasury yields gain 1.3 basis points (bps) to 0.717% whereas stocks in Asia also portray mild gains as we write.
Looking forward, the US Markit PMIs and the New Home Sales figures are likely to decorate the economic calendar. Though, major attention will be given to the headlines conveying developments on the Sino-American tussle as well as the pandemic.
Technical analysis
Considering the pair’s weakness below a descending trend line from May 14, at 1.3615 now, the quote aims to re-test the 200-SMA level of 1.3480 during the further weakness. However, any more fall under 1.3480 will push the sellers towards refreshing the monthly low of 1.3315.
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