- A combination of supporting factors helps the USD / CAD regain positive traction on Thursday.
- A pullback in oil prices weighs on the CAD and offers some support amid a stronger USD.
- Investors now await the release of US data for a significant trade boost.
The pair USD / CAD maintains its modest intraday gains during the European session on Thursday, although it lacks any follow-up buy. At the time of writing, the pair s moves around the region of 1.2615, up almost 0.20% on the day.
After the previous day’s retracement of around 55 pips from the 1.2645 area, the USD / CAD pair has managed to regain positive traction on Thursday and has been supported by a combination of factors. The strong movement the day before in US Treasury yields it has continued to act as a tailwind for the US dollar. Apart of this, a softer tone around oil prices has weighed on the CAD, a currency linked to commodity prices, which has offered some support to the USD / CAD pair.
The concerns about the Delta variant The rapidly spreading vaccine declined after the U.S. Food and Drug Administration (FDA) granted full approval to the Pfizer / BioNTech vaccine for COVID-19. Development seems to have raised Hopes that inoculations in the United States could be sped up. In addition to this, America’s leading infectious disease expert, Dr. Anthony Fauci, said that covid-19 could be under control early next year and further increased investor confidence.
Market participants now seem convinced the Fed could still begin reversing its pandemic-era stimulus in 2021. This, in turn, pushed the benchmark 10-year US government bond yield closer to the 1.35% level and extended some support to the USD. That said, the underlying bullish sentiment in the markets has prevented the bulls from opening aggressive positions around the safe-haven USD and did not provide any additional boost to the USD / CAD pair.
In the meantime, Renewed Fuel Demand Concerns Amid Rising COVID-19 Infections led to a modest decline in crude prices, especially after a three-day rally. This was seen as a key factor that weighed on the loonie and continued to support a slightly bullish tone around USD / CAD. Investors, however, seem reluctant, preferring to wait on the sidelines before Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium.
Meanwhile, investors will take the indications of the US economic calendar, which highlights the publication of GDP and weekly jobless claims at the beginning of the American session today. This, along with US bond yields, should influence the USD. Apart from this, the oil price dynamics could also provide some boost to the USD / CAD pair.
USD / CAD technical levels
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