- USD/CAD extends Wednesday’s gain to hit a 10-day high of 1.3647 in Asia.
- The CAD is likely to take cues from the broader market sentiment.
- Trade tensions and renewed coronavirus fears have boosted demand for anti-risk assets.
USD/CAD rose to a 10-day high of 1.3647 during Thursday’s Asian trading hours, having rallied by 0.64% on Thursday. The upward momentum now looks to have stalled with the pair trading largely unchanged on the day at 1.3633.
Focus on risk sentiment
The Canadian dollar and other commodity dollars like the AUD and the NZD are the mercy of the broader market sentiment, which has turned anti-risk due to trade tensions and resurgent coronavirus fears.
On Wednesday, the Trump administration threatened to levy $3.1 billion tariffs on the EU/UK good. In response, Brussels called US’intentions very damaging. “It creates uncertainty for companies and inflicts unnecessary economic damage on both sides of the Atlantic,” said a European Commission spokesperson.
In addition, the increasing number of newly confirmed coronavirus cases in the US dampened expectations of an economic recovery, sending stocks lower. The Dow Jones Industrial Average fell by 700 points to register its worst day since June 11.
And the risk aversion looks set to continue with the S&P 500 futures currently trading on a flat note. As a result, the greenback is likely to continue drawing haven bids.
Meanwhile, markets may offer the Canadian dollar on Fitch Ratings’ decision to downgrade Canada’s credit rating to AA+ from AAA.
Technical levels
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