USD/CAD regains 1.3900 amid US dollar pullback, WTI pause
|- USD/CAD fails to extend the previous day’s losses.
- US dollar index bounces off 14-day low amid risk reset.
- WTI bulls catch a breather around two-month high.
- BOC’s Lane ruled out negative rates the previous day.
USD/CAD takes the bids near 1.3923, up 0.15% on a day, during the initial hour of Tokyo open on Thursday. The pair’s recent recovery could be attributed to the US dollar’s pullback from multi-day low, amid fresh challenges to risks, as well as a pause in the WTI oil’s rally near the two-month top.
Not only worrisome levels of the global coronavirus (COVID-19) figures but a widespread increase in the US virus figures seem to have negatively affected the market’s initial risk-on sentiment. Also weighing on the optimism could be the latest news from the Washington Post suggesting fresh US-China tussle.
Elsewhere, WTI bulls catch a breather around the highest since March 13 as fresh challenges to the risks pulled back the greenback from multi-day low, which in turn check the oil’s rise.
That said, the US dollar index (DXY), a gauge of the greenback versus the major currencies, prints 0.15% gains on a day while taking rounds to 99.33 by the press time.
It’s worth mentioning that the pair’s drop on Wednesday can be traced to the market’s broad risk-on sentiment amid hopes of further stimulus and nearness to the virus remedy. While joining the league to support further easing, but not the negative rates, Bank of Canada (BoC) Deputy Governor Timothy Lane said on Wednesday that the BoC's decision is not to cut rates again. It should also be noted that the latest FOMC minutes reiterated favors for the current monetary policy while ruling out negative rates again.
Although trade/virus updates are likely to keep the traders busy ahead of the US session, Canada’s ADP Employment Change, New Housing Price Index and the US preliminary PMIs for May will be the key to watch afterward.
Technical analysis
Even if 50-day EMA around 1.3950 restricts the pair’s immediate upside, 1.3870/50 area comprising lows marked since April 13, 2020, can keep the short-term declines limited.
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