- A goodish pickup in Oil prices underpinned Loonie and exerted some pressure.
- The USD fails to capitalize on rebounding US bond yields and does little to support.
The USD/CAD pair traded with a negative bias through the early European session on Thursday and extended the previous session’s late pullback from seven-week tops.
The pair failed to capitalize on its overnight strong up-move back above the very important 200-day SMA and started retreating from the vicinity of mid-1.3300s, with a combination of factors prompting some follow-through long-unwinding trade on Thursday.
Rebounding oil prices prompt some long-unwinding trade
A goodish pickup in Crude Oil prices on Thursday – now up almost 3% for the day – turned out to be one of the key factors underpinning demand for the commodity-linked currency – Loonie and seemed to be one of the key factors exerting some downward pressure.
After the previous session’s slump of almost 5% on the back of rising US stockpiles, Oil rebounded on Thursday and was supported by reports that Saudi Arabia – the world’s top exporter – contacted other producers and is in talks to take action to halt the slide in prices.
On the other hand, the US Dollar failed to gain any respite from a solid recovery in the US Treasury bond yields and further collaborated to the pullback, albeit the downside remained limited amid concerns over a significant drop in the global oil demand growth.
The recent escalation in the US-China trade tension is expected to have a harsher impact on the global economy and lead to a surplus situation in 2020, which might keep a lid on any runaway rally in Oil prices and attract some dip-buying interest around the major.
Moving ahead, Thursday’s economic docket – featuring the second-tier releases of the usual US initial weekly jobless claims and New Housing Price Index (NHPI) from Canada – will be looked upon for some trading opportunities later during the early North-American session.
Technical levels to watch
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