USD/CAD eases from tops, still well bid above 1.40 mark
|- USD/CAD gains some strong follow-through traction for the second straight session on Friday.
- The USD benefitted from weaker risk sentiment, which prompted some short-covering move.
- Oil prices consolidated this week’s strong recovery gains and did little to influence the loonie.
The USD/CAD pair refreshed daily tops, around the 1.4045 region during the early European session, albeit quickly retreated few pips thereafter.
The pair built on the previous day's goodish intraday recovery move from six-week lows, around mid-1.3800s, and gained some strong positive traction for the second consecutive session on Friday. The uptick could be attributed to some aggressive short-covering amid deteriorating global risk sentiment, which boosted the US dollar's relative safe-haven status against its Canadian counterpart.
The latest optimism over the successful stage 1 clinical trial of Gilead Sciences' antiviral drug remdesivir to treat COVID-19 patients and re-opening of economies in some parts of the world faded rather quickly. Instead, persistent worries over the economic fallout from the pandemic continued weighing on investors' sentiment and extended some support to traditional safe-haven currencies.
Meanwhile, oil prices consolidated this week's strong recovery gains and remained well supported by the fact that US crude inventories grew less than expected. However, the lack of any strong follow-through strength undermined demand for the commodity-linked currency – the loonie – and remained supportive of the pair's strong follow-through momentum on the last trading day of the week.
Market participants now look forward to the US economic docket, highlighting the release of ISM Manufacturing PMI. This along with some fresh developments surrounding the coronavirus saga and the broader market risk sentiment might influence the USD price dynamics. This, in turn, might produce some meaningful trading opportunities later during the early North-American session.
Technical levels to watch
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