- A modest pullback in oil prices undermined the loonie and extended support to USD/CAD.
- Fading hopes for an earlier Fed rate hike move weighed on the USD and capped the upside.
The USD/CAD pair bounced around 30 pips from the Asian session lows, albeit lacked any follow-through buying and was last seen trading near the 1.2620-25 area.
The pair managed to defend and attract some buying near the 1.2600 mark on Monday amid a modest pullback in crude oil prices, which tend to undermine the commodity-linked loonie. Despite the near-term disruption caused by an extremely dangerous Category 4 hurricane in the Gulf of Mexico, the black gold struggled to capitalize on the early uptick to more than three-week highs. Renewed worries about fuel demand – amid rising COVID-19 infections – seemed to be the only factor that weighed on the commodity and acted as a tailwind for the USD/CAD pair.
The supporting factor, to a larger extent, was offset by a softer tone surrounding the US dollar, which held bulls from placing aggressive bets and capped the upside for the USD/CAD pair. The Fed Chair Jerome Powell on Friday warned of the downside risks posed by the rapid spread of the delta variant and reassured that the US central bank was in no hurry to raise rates. This dashed hopes for an earlier move by the Fed and contributed to the ongoing slide in US Treasury bond yields. This, along with the risk-on mood, undermined the safe-haven USD.
This, in turn, warrants some caution for bullish traders and before positioning for any meaningful appreciating move. Market participants now look forward to the release of Pending Home Sales data from the US for some impetus later during the early North American session. The key focus, however, will remain on this week's other important macro data scheduled at the beginning of a new month, especially the closely-watched US monthly jobs report (NFP) on Friday. In the meantime, the US bond yields and the broader market risk sentiment might influence the USD. Apart from this, oil price dynamics might produce some opportunities around the USD/CAD pair.
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
EUR/USD stays below 1.0800 after upbeat US data
EUR/USD stays under bearish pressure and trades slightly below 1.0800 in the American session on Thursday. The data from the US showed that the real GDP growth for the fourth quarter got revised higher to 3.4% from 3.2%, supporting the USD and weighing on the pair.
GBP/USD stays in daily range above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth helps the USD stay resilient against its rivals and limits the pair's upside.
Gold clings to strong daily gains above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays above 4.2% after upbeat US data and makes it difficult for XAU/USD to preserve its bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.