USD/CAD adds to Wednesday’s post-BoC slump, drops to over 3-week lows

• Wednesday’s BoC statement lacked any dovish signals and continued underpinning Loonie.
• The USD fails to attract any buying interest despite a goodish pickup in the US bond yields.
• Investors now look forward to Thursday’s US macro releases for some short-term impetus.

The USD/CAD pair added to the previous session’s post-BoC heavy losses and remained under some selling pressure through the early European session on Thursday.
 
The pair extended previous session’s pullback from 2-1/2 month tops and witnessed some heavy selling in absence of any dovish signals from the Bank of Canada (BoC). This coupled with a strong rally in Crude Oil prices provided an additional boost to the commodity-linked currency – Loonie and collaborated to the pair’s sharp intraday slide of over 120-pips.

Subdued USD demand failed to provide any respite

The pair remained depressed on Thursday and failed to gain any respite from a modest pullback in Oil prices. Bearish traders took cues from a weaker tone surrounding the US Dollar, which struggled to attract any buying interest despite a strong rally in the US Treasury bond yields and positive trade-related headlines from China.
 
In the latest development, China confirmed that it will resume trade talks with the US in October and helped boost investors’ appetite for riskier assets, albeit firming expectations that the Fed will opt to ease monetary policy aggressively at its upcoming meeting in September kept the USD bulls on the defensive.
 
It will now be interesting to see if the pair is able to find any support at lower levels or the ongoing slide marks a near-term bearish breakdown, setting the stage for a further near-term depreciating move ahead of Wednesday’s important US macro releases – ADP report on private-sector employment and ISM non-manufacturing PMI.

Technical levels to watch