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  • USD/CAD remained confined in a narrow trading band through the early European session.
  • Coronavirus jitters underpinned the safe-haven USD and extended some support to the pair.
  • Subdued action around crude oil prices did little to influence the loonie or provide any impetus.

The USD/CAD pair extended its range-bound price action through the early European session and remained confined in a narrow band around mid-1.3300s.

Following the previous day’s pullback from levels beyond the 1.3400 mark, or seven-week tops, the pair now seems to have stabilised and seesawed between tepid gains/minor losses on the last day of the week. Concerns about the second wave of coronavirus infections overshadowed the latest optimism over the next round of the US fiscal stimulus measures. This, in turn, extended some support to the safe-haven US dollar and continued lending some support to the USD/CAD pair.

Reports indicated that the US Congress could break a months-long impasse to agree on the next round of fiscal stimulus measures. In fact, Democrats in the US House of Representatives are working on a $2.2 trillion coronavirus stimulus package. Moreover, the House Speaker Nancy Pelosi could resume stalled stimulus talks with the US Treasury Secretary Steven Mnuchin.

The greenback was further underpinned by a modest pickup in the US Treasury bond yields. On the other hand, A subdued action around crude oil prices failed to provide any meaningful impetus to the commodity-linked currency – the loonie. Hence, the USD price dynamics has been acting as an exclusive driver of the USD/CAD pair’s momentum through the first half of the trading action on Friday.

Market participants now look forward to the US economic docket, highlighting the release of Durable Goods Orders. The data might influence the USD price dynamics and produce some short-term trading opportunities later during the early North American session. Apart from this, the broader market risk sentiment will also be looked upon for some impetus.

Technical levels to watch