- A modest rally in the USD helped the USD / CAD gain some positive traction on Tuesday.
- A new leg down in US bond yields prevented the USD bulls from making any new bets.
- Bullish oil prices supported the loonie and helped limit the pair.
The pair USD / CAD added to his gains and updated the daily highs, around 1.3050 during the early days of the American session, although he quickly lost a few pips thereafter. The pair was last seen trading around the 1.3015-20 region, almost unchanged for the day.
After a brief consolidation during the first half of trading action on Tuesday, the pair managed to regain some traction and built on the overnight bounce from the nine-month lows. The rally was supported by the appearance of some buying around the US dollar. However, a positive tone around crude oil prices sustained the commodity currency – the Canadian dollar – and limited the rise in the USD / CAD pair.
Despite a promising development in the late-stage COVID-19 vaccine, investors remained skeptical about the efficacy and duration of the immunity provided. Nervousness fueled some safe haven flows to the dollar, which, in turn, was seen as one of the key factors lending some support to the USD / CAD pair. That being said, a new leg of the downside in US Treasury yields prevented USD bulls from making aggressive bets.
Meanwhile, Pfizer’s COVID-19 vaccine announcement on Monday raised hopes for a rapid recovery in global fuel demand. This was evident by some follow-up positive movement in crude oil prices, which further contributed to limiting gains for the USD / CAD pair. This makes it prudent to wait for some solid follow-up buying before confirming that the pair has bottomed out and positioning for any further appreciation moves.
There is no major economic data to move the market from either the US or Canada, leaving the USD / CAD pair at the mercy of USD / oil price dynamics. Apart from this, the speeches of the FOMC members will also be considered for some significant business opportunities.
Credits: Forex Street
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