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  • USD/CAD stages a modest bounce on Friday and snapped four consecutive days of the losing streak.
  • A modest pullback in the US equity futures benefitted the safe-haven USD and remained supportive.
  • The ongoing slide in oil prices undermined the loonie and provided an additional boost to the major.
  • Investors now look forward to the US/CAD jobs reports, US political developments for fresh impetus.

The USD/CAD pair regained some positive traction on the last day of the week and recovered a part of the overnight losses to over two-month lows.

A combination of supporting assisted the pair to stall its recent leg down, instead attracted some buying near the 1.3030-25 region and snap four consecutive days of the losing streak. As investors await the final result of the nail-biting US presidential election, a modest pullback in the US equity futures benefitted the US dollar’s safe-haven status.

Although the markets are betting that Democrat candidate Joe Biden will become the next US president, the fact that Republicans will retain control of the Senate dampened hopes for large fiscal stimulus packages. This comes amid the uncertain US political situation, which weighed on investors’ sentiment and drove some haven flows towards the greenback.

On the other hand, growing worries that renewed lockdown measures to contain the ever-increasing coronavirus cases could dent global fuel demand weighed on crude oil prices. In fact, WTI futures fell around 2.5% during the early part of the trading action on Friday, which undermined the commodity-linked loonie and remained supportive of the USD/CAD pair’s uptick.

That said, the pair on Thursday confirmed a near-term bearish break below a two-month-old ascending trend-line support. Hence, the attempted recovery runs the risk of fizzling out rather quickly. This makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move for the USD/CAD pair.

Moving ahead, the focus now shifts to the closely watched monthly jobs reports from the US and Canada. The US NFP report, along with US political developments, will play a key role in influencing the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.

Technical levels to watch