- USD/CAD edged lower on Monday and was being weighed down by a combination of factors.
- The USD remained depressed in the wake of the impasse over the US fiscal stimulus measures.
- An uptick in crude oil prices underpinned the loonie and added to the pair’s intraday selling bias.
The USD/CAD pair traded with a mild negative bias through the early European session and was last seen hovering near daily lows, around the 1.3235-40 region.
The pair met with some fresh supply on the first day of a new trading week and eroded a part of Friday’s intraday positive move of around 65 pips. The downtick was sponsored by a combination of factors – the prevalent US dollar selling bias and a modest uptick in crude oil prices.
The political deadlock over the US fiscal stimulus measures continued exerting pressure on the USD. It is worth reporting that the US Congress suspended talks for the COVID-19 stimulus package and left for a month-long recess on Thursday, fueling concerns about the US economic recovery.
Apart from this, the upbeat market mood further dented the greenback’s relative safe-haven status. The global risk sentiment remained well supported by the latest optimism over a potential vaccine for the highly contagious coronavirus disease and the postponement of the US-China trade deal review.
Meanwhile, China’s plans to ship large volumes of US crude in August and September partly offset concerns about a slowdown in demand recovery. This, in turn, provided a modest lift to oil prices, which further underpinned the commodity-linked loonie and added to the USD/CAD pair’s weaker tone.
The downside, however, remains limited, at least for the time being, as investors now seemed reluctant to place aggressive bets ahead of the FOMC minutes, scheduled for release on Wednesday. In the meantime, the Empire State Manufacturing Index might provide some trading impetus on Monday.
Technical levels to watch
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