- USD/CAD stands on a slippery ground, drops for consecutive second day.
- WTI snaps two-day losing streak, DXY drops as risks recover.
- Stimulus, vaccine hopes favor bulls to battle market frenzy.
- US ISM, Markit PMIs will populate calendar, stimulus update, vaccine news and equity moves should be watched carefully.
USD/CAD drops to 1.2766, down 0.19% on a day, as European traders prepare for Monday’s bell. The quote recently weakened after the US dollar’s broad losses, due to the fresh risk-on mood. Also favoring the sellers could be the gains of WTI, Canada’s highest export earner.
Market sentiment improves following the early Asian risk aversion, mainly on fears of further market restrictions after silver’s jump on chatters over social media platforms. The reason could be traced from Bloomberg’s news suggesting a meet between US President Joe Biden and 10 Republican leaders who earlier eyed a cut in the stimulus amount, mostly cheered as $1.9 trillion.
Also favoring the mood could be the reaction to the jump in the coronavirus (COVID-19) vaccinations in the developed nations and receding infections. Though, growing tensions over the vaccines and Australia’s fresh lockdown joins China’s downbeat PMIs to test the bulls.
On the contrary, Canada’s flight freeze to Mexico and China’s entry restrictions on Canadian travelers challenge the optimists, despite getting a less audience.
It’s worth mentioning that the improved market mood favored WTI to bounce off a one-week low, currently up 0.55% to $52.42, while dragging the US dollar index (DXY). That said, the DXY drops to 90.53, down 0.05% by press time. Additionally, S&P 500 Futures and stocks in Asia-Pacific are extra catalysts portraying the latest shift in sentiment.
Given the lack of major data/events from Canada, USD/CAD traders should pay attention to the US activity numbers for January, likely to recede, for short-term direction. However, a major focus will be on equities as markets have been very responsive to the share moves and chatters on the social media platforms. Further, US stimulus and the covid vaccine are extra catalysts worth observing.
Technical analysis
Although multiple failures to remain positive above 1.2800 favor USD/CAD sellers, coupled with the bearish MACD, an ascending trend line from January 21 and 200-bar SMA, respectively around 1.2765 and 1.2750, test intraday bears.
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 edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.