- A combination of factors assisted USD/CAD to gain traction for the third consecutive session.
- Fresh coronavirus jitters weighed on investors’ sentiment and benefitted the safe-haven USD.
- A further pullback in oil prices undermined the loonie and remained supportive of the uptick.
The USD/CAD pair broke out of its Asian session consolidation phase and climbed to 1-1/2-week tops, just above mid-1.3600s in the last hour.
The pair prolonged this week’s goodish recovery move from levels below the key 1.3500 psychological mark and gained traction for the third consecutive session on Thursday. The uptick was supported by a combination of factors, including some follow-through US dollar strength and a weaker tone surrounding crude oil prices.
Investors remain concerned about the ever-increasing number of new coronavirus cases globally and the possibility of renewed lockdowns to control the spread. This, in turn, dampened prospects of a sharp V-shaped global economic recovery, which was reaffirmed by the latest projections by the International Monetary Fund.
In its latest economic forecasts, the IMF projected a deeper recession in 2020 and a slower recovery in 2021. The IMF now expects the global output to contract by 4.9% in 2020 – 1.9% below -3% April forecast – and grow by 5.4% in 2021.
Worries about the second wave of coronavirus infections continued benefitting the safe-haven greenback. This along with some follow-through pullback in oil prices undermined demand for the commodity-linked currency – the loonie – and remained supportive of the USD/CAD pair’s ongoing recovery momentum.
Moving ahead, market participants now look forward to a slew of important US macro data for some fresh impetus. The US economic docket highlights the release of Initial Weekly Jobless Claims and Durable Goods Orders. This, along with the final Q1 GDP report from the US might influence the USD price dynamics and produce some short-term trading opportunities.
Technical levels to watch
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