- USD/CAD failed to capitalize on Thursday’s early uptick to levels beyond the 1.3600 mark.
- The upbeat market mood, sliding US bond yields undermined the USD and capped gains.
- Bullish crude oil prices benefitted the loonie and prompted some selling around the pair.
- The downside seems limited as the focus remains on the closely-watched US NFP report.
The USD/CAD pair quickly retreated around 25-30 pips from session tops and dropped to the lower end of its daily range, around the 1.3585-80 region.
A combination of factors failed to assist the pair to capitalize on the Asian session uptick to levels beyond the 1.3600 round-figure mark, rather prompted some selling. The USD/CAD pair, for now, seems to have stalled its modest recovery attempt from one-week lows set on Wednesday.
The US dollar remained depressed through the early half of Thursday’s trading action amid the latest optimism over yet another positive results from the early-stage human trial for a COVID-19 vaccine. This coupled with sliding US Treasury bond yields further undermined the greenback.
This comes on the back of positive data from the US and Europe, which revived hopes of a sharp V-shaped global economic recovery. This, in turn, remained supportive of the upbeat market mood, which further dented demand for the safe-haven USD and capped the upside for the USD/CAD pair.
On the other hand, the commodity-linked currency – the loonie – benefitted from the bullish sentiment surrounding crude oil prices. A sharp drop in the US crude inventories temporarily eased concerns about renewed lockdown measures, which might hinder a recovery in fuel demand.
The USD/CAD pair’s inability to gain any meaningful traction suggests that the near-term bearish bias is still far from being over. However, investors are likely to refrain from placing any aggressive bets for any further downfall, rather prefer to wait for Thursday’s release of the US monthly jobs data.
The closely watched NFP report is expected to show that the US economy created 3 million jobs in June and the unemployment rate is anticipated to have edged lower to 12.3% from 13.3% previous. The data will influence the USD price dynamics and produce some meaningful trading opportunities.
Technical levels to watch
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