- USD/CAD caught some fresh bids on Monday and jumped back above the 1.2600 mark.
- A softer risk tone helped revive demand for the safe-haven USD and remained supportive.
- Falling crude oil prices undermined the loonie and provided an additional boost to the pair.
The USD/CAD pair maintained its bid tone through the early European session and was last seen hovering near the top end of its daily trading range, comfortably above the 1.2600 mark.
A combination of factors assisted the pair to regain positive traction on the first day of a new trading week and inch back closer to the two-week tops touched last Thursday. Against the backdrop of the upbeat US economic outlook, a softer risk tone helped revive demand for the safe-haven US dollar. Apart from this, a fresh leg down in crude oil prices undermined the commodity-linked loonie and provided an additional boost to the USD/CAD pair.
Investors remained optimistic about the prospects for a relatively faster US economic recovery amid the impressive pace of COVID-19 vaccinations and the passage of a massive stimulus package. The US President Joe Biden – in his first formal news conference on Thursday – made an ambitious pledge of administering 200 million vaccine shots in 100 days. Adding to this, investors have been speculating for another $3.0 trillion infrastructure plan from the US.
Meanwhile, news from the Suez Canal that the stranded container ship Ever Given has almost been completely floated sent crude oil prices sharply lower. In fact, WTI futures were down nearly 2.50% for the day, which was seen as another factor that drove the USD/CAD pair higher through the first half of the trading action on Monday. That said, the lack of any strong follow-through buying warrants some caution before positioning for any further appreciating move.
Investors might now refrain from placing aggressive bets, rather prefer to wait on the sidelines ahead of Friday’s release of the closely-watched US monthly jobs report (NFP). In the meantime, the broader market risk sentiment might influence the USD. This, along with oil price dynamics, will be looked upon for some short-term trading opportunities around the USD/CAD pair.
Technical levels to watch
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