USD/CAD holds comfortably above 1.3900 mark, lacks follow-through amid rallying oil prices
|- USD/CAD edges higher on Thursday amid a modest pickup in the USD demand.
- Escalating US-China tensions benefitted the USD’s perceived safe-haven status.
- The ongoing bullish run in oil prices underpinned the loonie and capped gains.
The USD/CAD pair held on to its mildly positive tone through the early European session and was last seen trading with modest gains, comfortably above the 1.3900 round-figure mark. The uptick, however, lacked any strong follow-through and the pair remained well within a three-day-old trading range.
Growing market fears about the second wave of coronavirus infections and concerns over worsening US-China relations took its toll on the global risk sentiment. This coupled with Wednesday's dovish sounding FOMC meeting minutes benefitted the US dollar's perceived safe-haven status, which turned out to be one of the key factors that extended some support to the USD/CAD pair.
Tensions between the world's two largest economies escalated further after the US President Donald Trump accused China of running a massive disinformation campaign and mishandling the coronavirus outbreak at the initial stage. Adding to this, the US Senate passed a bill that could block some Chinese companies from selling shares on the American stock exchanges.
Meanwhile, a modest pickup in the USD demand, to some extent, was negated by the ongoing bullish momentum in crude oil prices. Signs of gradual demand recovery and a big drop in the US stockpiles led to the sixth consecutive day of a positive move in oil prices, which underpinned the commodity-linked currency – the loonie – and kept a lid on any strong gains for the major.
Hence, it will be prudent to wait for some strong follow-through buying before confirming that the USD/CAD pair might have formed a strong base near mid-1.3800s and positioning for any further near-term appreciating move.
Moving ahead, market participants now look forward to the US economic docket – featuring the release of Philly Fed Manufacturing Index, Initial Weekly Jobless Claims and Flash Manufacturing PMI. The data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.