- A combination of factors assisted USD/CAD to gain strong positive traction on Thursday.
- Rallying US bond yields prompted some intraday short-covering around the greenback.
- A pullback in oil prices undermined the loonie and remained supportive of the move up.
The USD/CAD pair maintained its bid tone through the early North American session and was last seen trading near the 1.2715 region, up around 0.30% for the day.
Following a brief consolidation through the early part of the trading action on Thursday, the pair gained some positive traction and moved away from multi-year lows, around the 1.2630 region touched in the previous session. The uptick was sponsored by a solid pickup in the US dollar demand and a modest pullback in crude oil prices, which tend to undermine the commodity-linked loonie.
The USD staged a solid rebound from the lowest level in nearly three years amid the ongoing rally in the US Treasury bond yields – triggered by expectations of a larger government borrowing. Investors started pricing in the prospects for additional US financial aid package following the Democratic sweep in the crucial US Senate runoff elections in the state of Georgia.
On the economic data front, the US Initial Jobless Claims unexpectedly fell to 787K during the week ending January 2 as compared to the previous week’s upwardly revised 790K. The reading, to a larger extent, was negated by worse-than-anticipated US trade balance figures, which showed that deficit jumped to $68.1 billion in November from $63.1 billion in the previous month.
Thursday’s economic docket also highlights the release of US ISM Services PMI and Ivey PMI from Canada. Meanwhile, the US bond yields might continue to influence the USD price dynamics. This, along with sentiment surrounding crude oil prices, might produce some meaningful trading opportunities around the USD/CAD pair.
Technical levels to watch
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