USD/CAD regains 1.3500 as US dollar bounces off 12-week low
- USD/CAD extends pullback from 1.3480 to keep the buyers hopeful.
- Market’s risk-tone struggles for direction following the previous day’s upbeat performance.
- US President Trump tried to keep the optimism but the pre-ECB mood seems to recall the US dollar from the multi-day low.
- Canadian trade numbers, US Jobless Claims are additional catalysts to watch.
Although the pair’s latest pullback from 1.3520 eats the USD/CAD pair’s major gains piled since early-Asia, Loonie pair stays away from the multi-day low of 1.3480 marked the previous day on early Thursday.
Given the lack of major data/events during the initial trading day, markets seem to consolidate Wednesday’s risk-on sentiment. The moves could also be traced to the pre-ECB mood.
Despite US President Donald Trump’s upbeat comments, the market’s risk-tone has been struggling for direction off-late. In his latest interview with Newsmax, US President Trump reiterated the call to not use further military power to tame the riots in the nation while also stepped back from any sanctions on the Chinese President Xi Jinping for the Hong Kong issue. The Republican leader also sounded optimistic about the US performance and the expected recovery in the economy but marked dislike for the World Trade Organization (WTO).
Following the news, US 10-year Treasury yields parted ways from the previous day’s run-up by declining 1.7 basis points (bps) to 0.74%. On the contrary, stocks in Japan, Australia and New Zealand remained positive by the press time.
The reason for the market’s mixed signals could be traced from the cautious sentiment ahead of today’s ECB meeting where the regional central bank is expected to inflation the stimulus kitty.
In addition to the ECB meeting, Canada’s April month trade numbers and the US Weekly Jobless Claims might entertain the traders ahead of the BOC’s policymaker Toni Gravelle’s speech. While the scheduled economics suggest further pullback of the USD/CAD pair, traders may look for confirmation of the BOC’s bullish bias in Mr. Gravelle’s speech.
Technical analysis
Considering the oversold RSI conditions, the USD/CAD pair is likely to register another U-turn from a 200-day SMA level of 1.3465. In doing so, May 29 low near 1.3715 could become immediate resistance to watch. It should also be noted that the February month adds strength to the 1.3465 support.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
