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  • USD/CAD is trading in a tight range on Thursday.
  • WTI posts small daily losses, holds above $48.
  • US Dollar Index remains depressed ahead of US data.

The USD/CAD pair closed in the negative territory for the fourth straight day on Wednesday and edged slightly lower on Thursday to touch its weakest level since December 13 at 1.2729. As of writing, the pair was down 0.14% on a daily basis at 1.2740.

The USD’s market valuation remains the primary driver of USD/CAD’s movements ahead of the New Year holiday. With risk flows continuing to dominate the financial markets in the last week of 2020, the US Dollar Index slumped to its lowest level since April 2018 at 89.51 and struggles to stage a meaningful rebound. At the moment, the index is down 0.1% on the day at 89.60.

The only data featured in the US economic docket will be the US Department of Labor’s weekly Initial Jobless Claims, which is unlikely to trigger a significant market reaction. Meanwhile, the barrel of West Texas Intermediate is trading with small losses above $48, failing to provide a catalyst for the commodity-related loonie.

USD/CAD 2021 outlook

USD/CAD Price Forecast 2021: The complications of COVID-19 on the loonie and the hope for a recovery.

“The recent superiority of Canadian economic data, primarily re-employment and retail sales, may or may not continue but the clear return of a US statistical advantage needed to affect the USD/CAD cannot occur until the American economy is operating at a much higher level than it is now,” says FXStreet Senior Analyst Joseph Trevisani. “That is unlikely until at least the second quarter and more probably the third.”

Technical levels to watch for