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  • USD/CAD regained positive traction on Thursday and recovered a part of the overnight losses.
  • The upbeat US economic outlook continued underpinning the USD and remained supportive.
  • A pickup in crude oil prices benefitted the loonie and kept a lid on any strong gains for the pair.

The USD/CAD pair maintained its bid tone heading into the European session, albeit has retreated few pips from daily tops. The pair was last seen trading just below the 1.2600 mark, up 0.25% for the day.

The pair managed to regain some positive traction on Thursday and recovered a part of the overnight heavy losses to over one-week lows. Following the previous day’s modest profit-taking slide, the US dollar was back in demand and stood tall near four-month tops. This, in turn, was seen as a key factor lending some support to the USD/CAD pair.

Investors remained optimistic about the outlook for the US economy amid the impressive pace of coronavirus vaccinations and US President Joe Biden’s spending plan. In fact, In fact, Biden recently announced the opening of the COVID-19 vaccine program for 90% of American adults by April 19 and also unveiled a $2.3 trillion infrastructure package.

Wednesday’s mostly in line/upbeat US macro releases added to the narrative of a relatively faster US economic recovery from the pandemic and remained supportive of the bullish sentiment surrounding the greenback. According to ADP, the US private-sector employers added 517K jobs in March as compared to the previous month’s upwardly revised reading of 176K.

Separately, the Chicago Purchasing Managers’ Index (PMI) improved sharply to 66.3 in March from 59.5 in February and surpassed consensus estimates pointing to a reading of 60.7. This, to a larger extent, helped offset a modest pullback in the US Treasury bond yields and continued underpinning the buck, which, in turn, provided a modest lift to the USD/CAD pair.

That said, a pickup in crude oil prices – now up over 1% for the day – benefitted the commodity-linked loonie and kept a lid on any further gains for the USD/CAD pair, at least for now. The black gold remained supported by expectations that OPEC+ members will roll over the supply curbs into May at its meeting on Thursday, though renewed coronavirus jitters capped gains.

Apart from the outcome of the OPEC+ meeting, traders on Thursday will confront the release of the US ISM Manufacturing PMI. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to the USD/CAD pair. The focus, however, will remain on Friday’s release of the closely-watched US monthly jobs report – popularly known as NFP.

Technical levels to watch