- USD/CAD witnessed some selling for the third consecutive session on Tuesday.
- Retreating US bond yields, the risk-on mood weighed on the safe-haven USD.
- Bullish oil prices underpinned the loonie and exerted some additional pressure.
The USD/CAD pair remained depressed through the early European session and was last seen hovering around the 1.2730-25 region, or two-week set earlier this Tuesday.
The pair added to the overnight losses and witnessed some selling for the third consecutive session. The downtick was sponsored by the emergence of some selling around the US dollar and the ongoing bullish run in crude oil prices, which tend to underpin demand for the commodity-linked loonie.
The latest US monthly jobs report – released on Friday – raised doubts about a relatively faster US economic recovery from the coronavirus pandemic. This, along with a turnaround in the US Treasury bond yields, led to some USD profit-taking from over two-month tops touched on the first day of the week.
Investors have been pricing in the prospects for a massive US fiscal spending amid developments to fast-track the US President Joe Biden’s proposed $1.9 trillion stimulus package. Adding to this, the progress in coronavirus vaccinations, pushed the US bond yields to the highest level in a year.
The combination of factors has been fueling optimism over a strong global economic recovery and a pickup in fuel demand. Apart from this, additional supply reductions by top exporter Saudi Arabia lifted oil prices to the highest level in 13 months, around the $58.30 region on Tuesday.
The extension of a strong rally in oil prices further contributed to the offered tone surrounding the USD/CAD pair. That said, the pair, so far, has managed to hold its neck above the 1.2700 mark, which, in turn, warrants some caution for bearish traders amid absent relevant economic data from the US.
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