USD/CAD sits near multi-week tops, just above 1.3400 mark amid stronger USD

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  • A combination of factors assisted USD/CAD to gain some follow-through traction on Thursday.
  • Coronavirus jitters, the prevalent risk-off mood continued benefitted the safe-haven greenback.
  • Sliding crude oil prices undermined the loonie and remained supportive of the positive move.

The USD/CAD pair held steady near multi-week tops, with bulls looking to build on the momentum further beyond the 1.3400 round-figure mark.

The pair added to the previous day’s strong positive move and gained some follow-through traction through the first half of the trading action on Thursday. The uptick was supported by sustained US dollar buying and a weaker tone surrounding crude oil prices, which tend to undermine demand for the commodity-linked currency – the loonie.

Worries that the second wave of coronavirus infections threatened to derail the global economic recovery and continued weighing on investors’ sentiment, which, in turn, boosted the greenback’s safe-haven status. The USD bulls largely shrugged off warnings by various Fed officials, stressing the need for more fiscal stimulus to sustain the recovery.

Meanwhile, concerns that the second wave of COVID-19 cases could lead to the return of severe lockdown and travel restrictions dampened prospects of any meaningful recovery in the fuel demand. Jitters over demand and economic outlook weighed on crude oil prices, which fell around 1% on Thursday and remained depressed below the key $40.00 psychological mark.

Thursday’s US economic docket highlights the release of Initial Weekly Jobless Claims and New Home Sales data. This, along with a scheduled testimony by the Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin, will influence the USD price dynamics and produce some meaningful trading opportunities later during the North American session.

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