- Oil prices added to the overnight losses and continued undermining the Loonie.
- The USD gains some traction despite falling US bond yields and remain supportive.
- Traders now look forward to the US ISM non-manufacturing PMI for a fresh impetus.
The Canadian Dollar lost some additional ground against its American counterpart and pushed the USD/CAD pair to one-month tops, around the 1.3335-40 region in the last hour.
A combination of factors assisted the pair to gain some follow-through traction for the second consecutive session on Thursday and built on the overnight solid intraday recovery move of around 120 pips from over two-week low level of 1.3206.
Weaker Oil/modest USD rebound supportive
It is worth recalling that a sharp intraday slide in Crude Oil prices, falling nearly 2% on Wednesday, weighed heavily on the commodity-linked currency – Loonie and turned out to be one of the key factors behind the pair’s strong bullish momentum.
Oil prices remained on the defensive through the early European session on Thursday, which coupled with a modest US Dollar uptick – despite the ongoing slide in the US Treasury bond yields – remained supportive of the pair’s positive move.
Against the backdrop of the global flight to safety, speculations that the Fed will cut interest rates again in October dragged the US bond yields to the lowest level since September 9 and might keep a lid on any meaningful USD appreciating move.
Meanwhile, Thursday’s move up could further be attributed to some technical buying, especially after the previous session’s sustained beak through the very important 200-day SMA barrier, and support prospects for additional gains.
Moving ahead, market participants now look forward to the US economic docket – highlighting the release of ISM non-manufacturing PMI – in order to grab some short-term trading opportunities later during the early North-American session.
Technical levels to watch
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