- A combination of factors prompted some fresh selling around USD/CAD on Wednesday.
- Concerns about surging COVID-19 cases in the US continued weighing on the greenback.
- A modest uptick in oil prices underpinned the loonie ahead of Canadian inflation figures.
The intraday USD selling bias picked up pace during the early European session and dragged the USD/CAD pair to the lower end of its weekly range, around the 1.3070 region in the last hour.
The pair failed to capitalize on the previous day's positive move, instead witnessed some fresh selling on Wednesday and was being pressured by a weaker tone surrounding the US dollar. Despite the latest optimism around promising vaccine trials, investors remain concerns about the potential economic fallout from the imposition of new coronavirus restrictions in several US states. This, in turn, kept the USD bulls on the defensive and was seen as a key factor exerting pressure on the USD/CAD pair.
Apart from a weaker greenback, a modest pickup in crude oil prices underpinned the commodity-linked currency – the loonie – and further contributed to the USD/CAD pair's intraday slide. Oil prices remained well supported by hopes that OPEC and its allies will delay a planned rise in output. This helped offset fears over reduced fuel demand on the back of the continuous surge in new COVID-19 cases and the overnight API report, which showed that US crude stockpiles rose more-than-expected, by 4.2 million barrels last week.
Meanwhile, the downside remains cushioned, at least for the time being, as investors now look forward to the latest Canadian consumer inflation figures for a fresh impetus. The data is scheduled for release during the early North American session, which along with a scheduled speech by the Bank of Canada (BoC) senior deputy governor Carolyn Wilkins will influence the Canadian dollar. Traders might further take cues from second-tier US macro releases.
Wednesday's US economic docket features the release of housing market data – Building Permits and Housing Starts. Apart from this, developments surrounding the coronavirus saga and the broader market risk sentiment might further contribute to produce some short-term trading opportunities on Wednesday.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD recovers above 0.6750 after Australian jobs data
AUD/USD picks up a late bid and recovers above 0.6750 in Asian trading on Thursday, following the release of mixed Australian employment data. The extended post-Fed US Dollar recovery, amid a cautious market mood, could limit the pair's upside ahead of US data.
USD.JPY jumps toward 144.00 on the road to recovery
USD/JPY gains traction and approaches 144.00 in Thursday's Asian session. The uptick of the pair is bolstered by the impressive US Dollar recovery. Investors shift their attention to the US data and the Bank of Japan interest rate decision on Friday.
Gold price remains on the defensive amid the post-FOMC USD recovery from YTD low
Gold price struggles to lure buyers despite the Fed’s jumbo interest rate cut on Wednesday. A further recovery in the US bond yields underpins the USD and caps the non-yielding metal. Concerns about an economic slowdown, along with geopolitical risks, help limit the downside.
Ethereum attempts recovery following first rate cut in four years
Ethereum is trading above $2,330 on Wednesday as the market is recovering following the Federal Reserve's decision to cut interest rates by 50 basis points. Meanwhile, Ethereum exchange-traded funds recorded $15.1 million in outflows.
Australian Unemployment Rate expected to hold steady at 4.2% in August
The Australian Bureau of Statistics will release the monthly employment report at 1:30 GMT on Thursday. The country is expected to have added 25K new positions in August, while the Unemployment Rate is foreseen to remain steady at 4.2%.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.