- Rising Oil prices benefitted Loonie and exerted some downward pressure.
- Rallying US bond yields underpinned the USD and helped limit the downside.
The USD/CAD pair traded with a mild negative bias on the first day of a new trading week and is currently placed at multi-day lows, just above mid-1.3200s.
The pair extended last week’s late pullback from the 1.3340-45 supply zone and remained under some selling pressure for the third consecutive session on Monday, rather unaffected by a modest pickup in the US Dollar demand. The prevalent risk-on mood helped the US Treasury bond yields to build on the recent bounce from multi-year lows, which eventually underpinned the greenback demand.
Positive Oil prices underpin Loonie
Traders, however, took cues from a goodish up-move in Crude Oil prices, which benefitted from the latest US-China trade development and benefitted the commodity-linked currency – Loonie. Meanwhile, recessionary fears and rising US stockpiles might cap further gains for Oil and turned out to be one of the key factors that might help limit any further downside for the major.
This coupled with the fact that investors might refrain from placing any aggressive bets ahead of Wednesday’s important release of the latest FOMC meeting minutes might further collaborate towards lending some support. Traders this week will also scrutinize the Fed Chair Jerome Powell’s scheduled speech at Jackson Hole Symposium, which might help provide a fresh directional impetus.
Heading into this week’s key event risks, the USD/Oil price dynamics might play a key role in influencing the pair’s momentum amid absent relevant market-moving economic releases on Monday – either from the US or Canada.
Technical levels to watch
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