- USD/CAD failed to capitalize on the previous day’s goodish intraday gains.
- Bulls seemed rather unimpressed by a modest pickup in the USD demand.
- Tumbling US bond yields kept a lid on the attempted USD positive move.
The USD/CAD pair traded with a mild negative bias through the early European session, albeit has managed to recover around 15 pips from daily lows.
The pair failed to capitalize on the previous day’s goodish intraday positive move to the vicinity of the 1.3400 round-figure mark, rather met with some fresh supply on Wednesday and seemed unaffected by a modest pickup in the US dollar demand.
Wednesday’s key focus will be on BoC rate decision
As investors digested the Fed’s surprise move on Tuesday, to cut interest rates by 50 bps, the greenback gained some positive traction, albeit lacked any bullish conviction amid the ongoing slump in the US Treasury bond yields to fresh record lows.
On the other hand, a mildly positive tone around crude oil prices extended some support to the commodity-linked currency – the loonie – and turned out to be the only factor exerting some downward pressure on the major.
Meanwhile, the downtick could also be attributed to some repositioning trade ahead of the highly anticipated Bank of Canada monetary policy decision, scheduled to be announced later during the early North-American session on Wednesday.
Heading into the key event risk, the US economic docket – featuring the release of the ADP report on private-sector employment and ISM Non-Manufacturing PMI – might influence the USD price dynamics and produce some meaningful trading opportunities.
Technical levels to watch