- USD/CAD keeps the early-Asia recovery moves from 1.3600 to probe Friday’s top.
- Recovery in the US dollar, WTI weakness favor the bulls amid risk-off mood.
- China trade data, US CPI and risk catalysts in the spotlight.
USD/CAD eases from intraday top of 1.3625 to 1.3615, up 0.05% on a day, amid Tuesday’s Asian session. The pair’s sustained trading beyond 1.3600 enables it to portray the fourth consecutive day of gains following its U-turn during the last Thursday. While US-China tussle and the coronavirus (COVID-19) headlines keep weighing on the risk-tone, the recent pullback in the US dollar, in contrast to the weakness of oil prices, seems to propel the quote off-late.
Despite witnessing a mild relief from the US COVID-19 updates, pandemic figures from Asia-Pacific nations refrain from entertaining the optimists. Atop all, news that the US drug-makers will soon start productions of vaccine signals a ray of hopes at the end of the tunnel.
On the other hand, noises surrounding the South China Sea adds to the list of factors the generate Sino-American tussle. Earlier during the day, Bloomberg turned down the odds of the US undermining Hong Kong dollar peg whereas Reuters suggested further hardships for Chinese companies’ listings on American exchanges.
Against this backdrop, S&P 500 Futures print mild gains of 0.15% but the US 10-year Treasury yields drop 2.5 basis points (bps) to 0.615%. Further, stocks in Japan, Australia and China mark smaller losses while WTI drops near 0.90% to $39.42 as we write.
Looking forward, China’s June month trade balance and the US Consumer Price Index (CPI) figures for the same month could offer intermediate clues ahead of the earnings season that could keep helping the greenback to extend the latest recoveries. Though, qualitative risk catalysts concerning the virus and the US-China tussle shouldn’t be ignored in any way.
Technical analysis
Buyers will wait for a clear rise past-1.3620 level, comprising the short-term falling channel’s upper line, to target a 50% Fibonacci retracement level of the pair’s May 22 to June 10 fall at 1.3681. Meanwhile, the sellers will enter on the pair’s firm weakness below 1.3600 whereas aiming 1.3540 as an immediate target before testing multiple bounce-points around 23.6% Fibonacci retracement level around 1.3490/85.
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