- USD/CAD witnessed some selling on Wednesday and erased the overnight gains to three-week tops.
- A modest USD profit-taking turned out to be a key factor that exerted some pressure on the major.
- The US ADP report and the monthly Canadian GDP print did little to provide any meaningful impetus.
The USD/CAD pair maintained its offered tone through the early North American session and had a rather muted reaction to the US/Canadian macro releases. The pair was last seen hovering near the 1.2600 mark, down around 0.30% for the day.
The pair came under some renewed selling pressure on Wednesday and eroded a major part of the previous day's positive move to near three-week tops. This marked the first day of a negative move this week and was exclusively sponsored by a modest US dollar pullback from multi-month tops.
Having struggled to capitalize on the overnight spike to the highest level since January 2020, the yields on the benchmark 10-year US government bond remained depressed near 1.72%. This, in turn, seemed to be the only factor that prompted the USD bulls to take some profits off the table.
On the economic data front, the ADP report showed that the US private-sector employers added 517K jobs in March. The reading fell short of market expectations but was still well above February's upwardly revised figure of 176K and added to the narrative of a relatively US economic recovery.
On the other hand, the monthly Canadian GDP came in to show that the economy expanded by 0.7% MoM in January as against 0.5% growth anticipated. The positive data, to a larger extent, was offset by a subdued action around oil prices, which tend to influence the commodity-linked loonie.
This, in turn, failed to impress traders or provide any meaningful impetus to the USD/CAD pair. Traders now seemed reluctant to place any aggressive directional bets, rather preferred to wait on the sidelines ahead of the OPEC+ meeting on Thursday and Friday's US monthly jobs report (NFP).
In the meantime, the USD price dynamics will play a key role in influencing the USD/CAD pair. Hence, the key focus will be on the US stimulus headlines and US President Joe Biden's speech at 20:20 GMT, elaborating details of the proposed $2.25 trillion infrastructure spending plan.
Technical levels to watch
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