- A combination of factors helped the USD / CAD gain strong positive traction on Thursday.
- The rally in US bond yields triggered some short intraday hedging around the dollar.
- A drop in oil prices undermined the loonie and continued to support the rise.
The pair USD / CAD It maintained its offered tone during the early North American session and was last seen trading near the 1.2715 region, rising around 0.30% for the day.
Following a brief consolidation in early trading action on Thursday, the pair gained some positive traction and moved away from multi-year lows around the 1.2630 region touched in the previous session. The rally was sponsored by a solid rebound in demand for US dollars and a modest decline in crude oil prices, both of which tend to undermine the commodity-linked Canadian dollar.
The US dollar saw a solid rebound from the lowest level in nearly three years amid the ongoing rally in US Treasury yields, sparked by expectations of higher government borrowing. Investors began to weigh the prospects for an additional package of US financial aid following the Democratic sweep in the crucial US Senate second-round elections in the state of Georgia.
On the economic data front, US Initial Unemployment Claims unexpectedly fell to 787,000 during the week ending January 2 compared to a revised upward 790,000 the previous week. The reading, to a greater extent, was negated by worse-than-anticipated U.S. trade balance figures, which showed the deficit jumped to $ 68.1 billion in November from $ 63.1 billion in the previous month.
Thursday’s economic agenda also highlights the release of the US ISM services PMI and Canada’s Ivey PMI. Meanwhile, US bond yields could continue to influence USD price dynamics. This, coupled with the sentiment around crude oil prices, could generate some significant trading opportunities around the USD / CAD pair.
Technical levels
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