- USD/CAD failed to capitalize on the overnight goodish intraday bounce from multi-week lows.
- Some renewed USD weakness and a goodish pickup in oil prices exerted some fresh pressure.
- Softer -than-expected Canadian CPI did little impress bulls ahead of FOMC meeting minutes.
The USD/CAD pair maintained its offered tone below the 1.3900 mark and remained well within the striking distance of three-week lows set on Tuesday.
Following a brief consolidation through the early part of the European trading session, the pair met with some fresh supply and reversed a major part of the overnight goodish intraday bounce of around 100 pips. The downfall was sponsored by a combination of factors – some renewed US dollar selling bias and a goodish pickup in crude oil prices.
Despite doubts over a potential COVID-19 vaccine, strong corporate earnings provided a strong boost to the US equity futures and weighed on the greenback’s relative safe-haven status. It is worth recalling that reports on Tuesday indicated that the US drugmaker Moderna had provided insufficient data to determine the vaccine’s efficacy.
On the other hand, the commodity-linked currency loonie befitted from a fresh leg up in crude oil prices, which remained well supported by signs of gradual demand recovery on the back of easing lockdown restrictions globally. Meanwhile, the CAD bulls seemed rather unaffected by softer-than-expected Canadian consumer inflation figures.
According to the data published by Statistics Canada, the headline CPI fell 0.2% YoY in April and by 0.7% on a monthly basis, both missing consensus estimates pointing to a reading of -0.1 and -0.6%, respectively.
It will now be interesting to see if the pair is able to attract any buying interest at lower levels or break through the recent swing lows support near mid-1.3800s. The focus now shifts to the release of the minutes of the latest FOMC meeting, which might influence the USD price dynamics and produce some meaningful trading opportunities later this Wednesday.
Technical levels to watch
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