- USD/CAD edged lower on Monday amid the prevalent selling bias surrounding the USD.
- Weaker oil prices undermined the loonie and helped limit deeper losses, at least for now.
The USD/CAD pair refreshed daily lows, around the 1.3555 region in the last hour, albeit lacked any follow-through selling and quickly bounced few pips thereafter.
The pair witnessed some selling on the first day of a new trading week and extended its retracement slide from near two-week tops, around the 1.3630 region set on Friday. The downtick was exclusively sponsored by the prevalent US dollar selling bias, albeit a weaker tone surrounding crude oil prices helped limit deeper losses for the USD/CAD pair.
Despite worries about the ever-increasing COVID-19 cases across the world, investors seem convinced that the worst of the pandemic was probably over. This coupled with the incoming positive data raised hopes of a swift economic recovery and remained supportive of the upbeat market mood, which continued weighing on the safe-haven greenback.
The upbeat market mood seemed rather unaffected by concerns over further deterioration in relations between the world’s two largest economies. It is worth recalling that the US President Donald Trump on Friday said that there will be no phase-two trade deal with China. Adding to this, China’s Foreign Minister threatened to impose sanctions on US lawmakers.
Meanwhile, the downside remained cushioned, at least for the time being, amid sliding oil prices, which tend to undermine the commodity-linked currency – the loonie. In fact, WTI crude oil fell over 1% on Monday as traders look forward to an OPEC technical meeting this week, which is expected to recommend an easing in supply cuts.
In the absence of any major market-moving economic releases, either from the US or Canada, the USD/oil price dynamics will continue to play a key role in influencing the USD/CAD pair’s momentum and produce some short-term trading opportunities.