- USD/CAD met with some fresh supply at higher levels and retreated over 80 pips from daily tops.
- The uncertain US political environment prompted traders to unwind some of their USD bullish bets.
- Bearish crude oil prices undermined the loonie and might help limit deeper losses for the major.
The USD/CAD pair extended its steady intraday downfall and slipped below the 1.3300 round-figure mark, hitting fresh daily lows in the last hour.
The pair struggled to capitalize on its intraday positive move, instead met with some fresh supply and has now retreated over 80 pips from the daily swing highs, around the 1.3370 region. The downtick lacked any obvious fundamental catalyst and could be solely attributed to some US dollar long-unwinding trade.
Despite concerns over the economic fallout from fresh coronavirus-induced lockdowns in Western countries, growing wariness about the actual outcome of the US presidential election held the USD bulls from placing fresh bets. Even a modest uptick in the US Treasury bond yields did little to revive the USD demand.
However, the prevalent bearish sentiment surrounding crude oil prices might continue to undermine demand for the commodity-linked currency – the loonie. This, in turn, might help limit the downside for the USD/CAD pair, at least for the time being, warranting some caution before positioning for any further depreciating move.
Oil prices added to last week’s heavy losses and dropped to the lowest level since May amid growing worries that stricter measures to curb the second wave of COVID-19 infections could lead to further demand destruction. However, upbeat Chinese manufacturing PMIs partly offset the negative factors and helped limit the losses.
Moving ahead, market participants now look forward to the release of the US ISM Manufacturing PMI for some impetus. The data, along with developments surrounding the coronavirus saga and the broader market risk sentiment, will influence the USD price dynamics. This should assist traders to grab some short-term opportunities.
Technical levels to watch
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