- USD/CAD struggled to capitalize on the early positive move to the 1.3175-80 region.
- A modest pickup in the USD demand was seen as a key factor lending some support.
- A goodish rebound in oil prices underpinned the loonie and capped any strong gains.
The USD/CAD pair extended its steady intraday retracement slide and refreshed daily lows, around the 1.3135 region during the early European session.
The pair built on the previous day’s strong bounce from six-week lows and gained traction through the first half of the trading action on Thursday. The momentum was sponsored by a modest pickup in the US dollar demand, supported by a weaker tone surrounding the equity markets.
The global risk sentiment took a hit on the back of fading hopes for a pre-election US fiscal stimulus measures. The latest optimism fizzled out rather quickly after the US President Donald Trump accused Democrats of being unwilling to craft an acceptable compromise on stimulus.
Adding to this, the House of Representatives Speaker Nancy Pelosi acknowledged that the measures might now pass before November 3 presidential election. Investors also doubt the ability of the US Congress to overcome strong opposition from Senate Republicans over a bigger stimulus bill.
The uptick, however, ran out of the steam and the USD/CAD pair met with some fresh supply near the 1.3175-80 region. A goodish rebound in crude oil prices underpinned the commodity-linked currency – the loonie – and was seen as a key factor exerting some pressure on the major.
Meanwhile, the downside seems limited, at least for the time being, as investors await updates on the next round of the US fiscal stimulus measures. Apart from this, the final presidential debate between Trump and Democrats candidate, Joe Biden might also infuse some volatility.
In the meantime, traders are likely to take cues from Thursday’s release of Initial Weekly Jobless Claims data from the US. This, along with the broader market risk sentiment, will influence the USD price dynamics and produce some short-term trading opportunities.
Technical levels to watch
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