Brexit led global risk-aversion has been supportive for the safe-haven demand for the US Dollar and denting demand for commodity-linked, high yielding currencies - like the Canadian Dollar, with the USD/CAD pair surging over 300-pips in a single trading session on Friday.
The pair, however, has failed to build on to its gains and decisively move above 100-day SMA resistance, around 1.3100 handle, despite of weaker crude oil prices and broadly strengthening US Dollar. The ongoing recovery for the USD/CAD pair could also be attributed to the current down-leg in crude oil prices, with the WTI crude oil now trading well below $47.00/barrel mark.
On Friday, a sudden drop in the US 10-years treasury yields, led by the unexpected outcome of the Brexit referendum, and a gush of flight to safety was seen supportive for the pair's sharp up-surge. Additional up-move, however, was restricted by a sharp slide in the Canadian 10-years treasury yields, which now seems to move in tandem with US 10-years treasury yields.
Looking at the current dynamics, most of the intrinsic are pointing towards further upside momentum for the pair in the near-term with the only factor restricting additional bullish momentum being the declining Canadian 10-year treasury yields. Hence, a slight improvement in the Canadian treasury yields would turn conditions favorable and assist the USD/CAD pair to extended its recovery trend beyond 100-day SMA resistance around 1.3100 region, towards testing May swing highs resistance around 1.3190 level.
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 holds above 1.0750 to start the week
EUR/USD trades in positive territory above 1.0750 in the European session on Monday. The US Dollar struggles to find demand following Friday's disappointing labor market data and helps the pair hold its ground.
GBP/USD edges higher toward 1.2600
Following Friday's volatile action, GBP/USD pushes higher toward 1.2600 on Monday. Soft April jobs report from the US and the modest improvement seen in risk mood make it difficult for the US Dollar to gather strength.
Gold rebounds above $2,310 after downbeat NFP data, eyes on Fedspeak
Gold price trades in positive territory above $2,310 after closing the previous week in the red. The weaker-than-expected US employment data have boosted the odds of a September Fed rate cut, hurting the USD and helping XAU/USD find support.
Addressing the crypto investor dilemma: To invest or not? Premium
Bitcoin price trades around $63,000 with no directional bias. The consolidation has pushed crypto investors into a state of uncertainty. Investors can expect a bullish directional bias above $70,000 and a bearish one below $50,000.
Week ahead: BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.