- USD/CAD witnessed some short-covering move on Friday amid a modest USD uptick.
- US fiscal impasse weighed on investors’ sentiment and benefitted the safe-haven USD.
- Weaker oil prices undermined the loonie and remained supportive of the intraday uptick.
The USD/CAD pair gained some positive traction during the mid-European session and climbed to fresh session tops, around the 1.2770-75 region in the last hour.
Having found some support near the 1.2700 mark in the previous session, the pair attracted some buying on Friday and for now, seems to have stalled its recent downfall to the lowest level since April 2018. The impasse over the next round of the US fiscal stimulus measures, along with persistent Brexit uncertainties dented investors’ confidence on the last trading day of the week.
The downbeat market mood was evident from a weaker trading sentiment across global equity markets, which drove some haven flows towards the US dollar. This, in turn, was seen as one of the key factors that seemed to have prompted some short-covering move around the USD/CAD pair. That said, the optimism over COVID-19 vaccine rollouts might keep a lid on the attempted USD recovery.
It is worth reporting that an advisory panel to the US Food and Drug Administration on Thursday voted overwhelmingly to endorse emergency use of Pfizer’s vaccine for the highly contagious coronavirus disease. Meanwhile, a softer tone surrounding crude oil prices undermined the commodity-linked currency – the loonie – and remained supportive of the USD/CAD pair’s uptick.
It will now be interesting to see if bulls are able to capitalize on the move or the USD/CAD pair meets with some fresh supply at higher levels as the focus remains on the US stimulus headlines. In the meantime, Friday’s US economic docket – featuring the releases of Producer Price Index and revised Michigan Consumer Sentiment Index will be looked upon for some trading impetus.
Technical levels to watch
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