USD/CAD in search of a firm direction, flat-lined below 1.3400 mark

• USD/CAD seesawed between tepid gains/minor losses through the North American session.
• A pickup in oil prices underpinned the loonie and partly offset a broad-based USD strength.
• Stronger macro data from the US and Canada held investors from placing any aggressive bets.

The USD/CAD pair refreshed daily lows during the early North American session, albeit lacked any strong follow-through and quickly recovered around 25 pips thereafter.

The pair struggled to capitalize on its early uptick and witnessed a modest intraday pullback from the top end of a one-week-old trading range, around the 1.3420 region. However, a combination of factors extended some support and helped limit any deeper losses for the USD/CAD pair.

The US dollar was back in demand on Wednesday in reaction to a chaotic end of the US presidential debate and maintained its bid tone following the release of upbeat US macro data. The US ADP report showed that private-sector employers added 749K new jobs in September.

Adding to this, the final version of the US GDP print was revised higher to show that the economy contracted by 31.4% during the second quarter of 2020 as against 31.7% estimated. Separately, Chicago PMI beat expectations by a big margin and surged to 62.4 for September.

Meanwhile, the monthly Canadian GDP report showed that the economy recorded a growth of 3% in July, lower than the previous month’s 6.5% rise. This, coupled with a modest uptick in crude oil prices, extended some support to the commodity-linked loonie and exerted some pressure.

Stronger economic data from both the US and Canada held investors from placing any aggressive bets. This coupled with the fact that the USD/CAD pair has been oscillating in a range over the past one-week or so further warrant some caution before positioning for the near-term trajectory.

Technical levels to watch