- USD/CAD keeps corrective pullback from lowest in one week.
- US infrastructure spending plan couldn’t please investors amid Senate rejection fears.
- WTI stays depressed amid French covid lockdown news, OPEC+ chatters.
- PMI data from US, Canada and US dollar moves will be the key to watch.
USD/CAD picks up bids to 1.2560, trimming the previous day’s losses, amid the initial Asian session on Thursday. The quote dropped to the lowest since March 23 while marking the heaviest daily losses on Wednesday. Although the US dollar pullback from the multi-month top and Canada’s upbeat GDP figures earlier weighed on the quote, its recent bounce seems to take clues from the risk catalysts.
Among them, a lack of strong positive response of US President Joe Biden’s $2.25 trillion infrastructure spending plan could be cited as the major reason for the pair’s latest corrective pullback. US President Biden’s bold efforts to help the middle-income groups and take taxes from the corporate is less likely to be welcomed in the Senate where the Democrats and Republicans hold 50/50 power.
Elsewhere, French lockdown for a month and an announcement from the US Trade Representative’s (USTR) office, suggesting further hardships for China, weigh on the market sentiment.
It should also be noted that the anticipated delay in Johnson and Johnson vaccine joins Brazil’s detection of a new covid variant to strengthen the risk-off mood.
Alternatively, upbeat economic figures from the Western leaders join Pfizer’s 100% vaccine efficacy on children to battle the bears.
Amid these plays, S&P 500 Futures struggle for a clear direction after Wall Street’s mixed closing.
Further, challenges to the risk and fears of further output cut weigh on WTI and favor USD/CAD buyers as crude oil is Canada’s biggest export item.
Looking forward PMIs from the US and Canada can entertain the market optimists but fears of the deadlock over the American infrastructure spending plan and covid headlines may challenge the market optimists. Also, upbeat fundamentals for the US and strong Treasury yields test the USD/CAD bears.
Technical analysis
An area comprising a two-month-old falling trend line and 21-day SMA, respectively around 1.2635-45, becomes a tough nut to crack for USD/CAD buyers while the 1.2500 threshold restricts the quote’s short-term downside.
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