USD/CAD eases from 1-1/2-week tops, holds steady above 1.3600 mark
|- USD/CAD gained traction for the second consecutive session on Friday.
- Concerns about surging COVID-19 cases benefitted the safe-haven USD.
- Weaker crude oil prices undermined the loonie and remained supportive.
- Investors now look forward to the Canadian jobs report for a fresh impetus.
The USD/CAD pair climbed further beyond the 1.3600 mark and shot to 1-1/2-week tops during the early European session, albeit quickly retreated few pips thereafter.
The pair gained some follow-through traction for the second straight session on Friday and built on the previous day's strong intraday bounce of over 100 pips from sub-1.3500 levels. The strong rebound was sponsored by a combination of factors, including a modest US dollar uptick and a pullback in crude oil prices.
The greenback was back in demand after the US report a record number of new coronavirus cases (over 60,000) on Thursday. The coronavirus outbreak showed no signs of abating and took its toll on the global risk sentiment, which boosted the safe-haven USD and prompted some short-covering move around the USD/CAD pair.
Meanwhile, the ever-increasing COVID-19 cases further fueled worries about renewed lockdowns measures, which, in turn, could suppress fuel demand. This led to a sharp pullback in crude oil prices, which extended through the first half of action on Friday and undermined demand for the commodity-linked currency – the loonie.
However, the global flight to safety triggered a fresh leg down in the US Treasury bond yields, which fell to the lowest level since April 11 and kept a lid on any strong USD gains. This eventually seemed to be the only factor that held investors from placing fresh bullish bets and capped the upside for the USD/CAD pair.
Market participants now look forward to the release of Canadian monthly employment details, which might influence the domestic currency. This along with the broader market risk sentiment and the USD/oil price dynamics might produce some meaningful trading opportunities on the last day of the week.
Technical levels to watch
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