- USD/CAD witnessed some selling on Friday amid a softer tone surrounding the USD.
- Coronavirus jitters should continue to extend support to the safe-haven greenback.
- Weaker crude oil prices might undermine the loonie and help limit deeper losses.
The USD edged lower during the early European session and pushed the USD/CAD pair back to the 1.3200 neighbourhood, or fresh daily lows in the last hour.
The pair failed to capitalize on its early uptick to the 1.3235-40 area, instead met with some fresh supply and retreated further from one-week tops, around the 1.3260 region touched on Thursday. The pullback was exclusively sponsored by a softer tone surrounding the US dollar.
The US President Donald Trump on Thursday offered to raise the size of a fiscal stimulus package to win the support of Republicans and Democrats. This, in turn, provided a modest lift to investors’ sentiment and undermined the greenback’s perceived safe-haven demand.
However, investors remain sceptic about a deal before the US presidential election on November 3. Adding to this, concerns about a steep rise in new coronavirus cases in Europe and the US might continue to lend some support to the USD’s status as the global reserve currency.
Meanwhile, investors remain concerned that another round of lockdowns to contain the spread of the coronavirus could weaken global energy demand. This was evident from weaker oil prices, which could weigh on the commodity-linked loonie and help limit the downside for the USD/CAD pair.
Market participants now look forward to the US monthly Retails Sales figures for some impetus. Friday’s US economic docket also features the Industrial Production data and the preliminary estimate of the October Michigan Consumer Sentiment Index. This, along with the broader market risk sentiment might produce some short-term trading opportunities.