USD/CAD jumps 25 pips as the US stock futures drop
- USD/CAD rises by 25 pips as losses in the US stock futures put a bid under the US dollar.
- Coronavirus concerns may keep risk assets under pressure.
- Bank of Canada's survey shows business sentiment in Canada is negative.
The American dollar is drawing bids and pushing USD/CAD higher amid losses in the US stock futures.
At press time, the USD/CAD pair is trading at session highs near 1.3550, having put in a low of 1.3525 early Tuesday. Notably, the pair is trading in the green, having declined for the third straight trading day on Monday.
The safe-haven dollar took a beating on Monday, as the global stock markets put in a solid performance despite the worrying increase in the number of coronavirus cases in the US and across the globe.
The dollar was operating on a weak ground early Tuesday as the futures were signaling continued risk-on action with a 0.30% gain.
The sentiment, however, has changed in the last hours or so with the stock futures falling into the red. Currently, the index futures are down 0.24% on the day and pushing the US dollar higher across the board.
The equity markets may erase gains seen on Monday, helping the US dollar recover losses, as the flare-up in virus cases across the globe may force governments to reimpose nationwide lockdowns. That in turn would complicate the still-nascent economic recovery. Also, the two-month average of the S&P 500’s put-call ratio is warning of an impending correction in stocks.
In addition, the business sentiment in Canada is strongly negative, according to the Bank of Canada’s Business Outlook Survey and the oil price rally looks to have stalled above $40.00. As a result, USD/CAD may remain better bid during the day ahead. However, if the equities again turn positive, the bearish trend in the US dollar will likely resume.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
