USD/CAD: Stays depressed around 1.3500 as USD losses supersede WTI’s weakness
|- USD/CAD seesaws around 1.3500 while keeping the previous day’s bearish momentum.
- US dollar drops to the lowest since June 11 as markets dislike surge in the virus cases and tussle with China.
- WTI fails to cheer greenback weakness amid fears of pandemic woes, geopolitical worries.
- US Jobless Claims, Canadian Housing Starts to decorate the economic calendar.
USD/CAD takes around to 1.3500, down 0.05% on a day, while heading into the European session on Thursday. The loonie pair extends the previous day’s losses while struggling to add losses as US dollar bears battle WTI sellers. Also confusing the pair traders will be a cautious mood ahead of the US/Canadian data after the government suggested the largest fall since World War II.
The US dollar index (DXY) drops 0.23% to 96.26, intraday low of 96.23, to visit the four-week low. The greenback seems to bear the burden of the surge in the coronavirus (COVID-19) figures, above 3.02 million on Wednesday. Also exerting downside pressure on the US currency is the record budget deficit and the trade/political fight between the world’s two largest economies from which China is recently adding gains to its equities.
Talking about WTI, the energy benchmark fails to cheer the USD weakness as uncertainty surrounding the future demand, due to the pandemic weighs on the quote. Further, bearish inventories and signals that the global leaders might refrain from extending the output cut accord add a smile on the face of the sellers. On the contrary, the buyers don’t run away as policymakers keep announcing stimulus in one way of the other and increase the odds of economic recovery.
At home, the Canadian Budget office anticipates C$343.2 billion ($253.4 billion), the largest shortfall since the Second World War amid increased spending to safeguard against the deadly virus. On the other hand, the Foreign ministers of the Five Eyes Group, comprising Canada, the US, Britain, Australia and New Zealand, marked ire over the Hong Kong security law and increased geopolitical fears.
While the qualitative catalysts will keep the driver’s seat, Canadian Housing Starts for June and the US Initial Jobless Claims for the week ended on July 03 could offer additional directives to the pair traders. Canadian housing market data might propel extra weakness into the pair if matching 198K forecast versus 193.5 expected. However, anticipated fall in the US Jobless Claims from 1427K to 1375K could again flash mixed signals.
Technical analysis
200-day SMA keeps restricting the pair’s immediate downside near 1.3500. Also acting as strong support will be 1.3480/85 area that comprises multiple high and low marked since early June. Meanwhile, a two-week-old falling trend line and 1.3625 could restrict the pair’s near-term advances.
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