USD / CAD falls back to 1.2700 due to the weakness of the USD

• USD / CAD has pulled back from the European morning session highs at 1.2780 to test the 1.2700 level.
• The CAD has lagged against the NZD, GBP and AUD, probably due to weak crude oil markets.

He USD / CAD has retreated from the European morning session highs at 1.2780 to retest the 1.2700 level as the loonie benefits from weak safe-haven currencies (including the U.S. dollar) amid a broad rally in the appetite for risk since the beginning of Europe. session. Currently, the pair is trading at a loss of around 0.3% or 30 pips on the day.

Driving the day

As for the reasons why sentiment has improved positively and the USD has fallen; Positive vaccine news is likely helping. Moderna announced last night that it was going to begin researching a booster vaccine (to be produced 6 to 12 months after the second dose) and Pfizer will also study a booster dose. Meanwhile, after the release of a decent earnings report, Johnson & Johnson’s (J&J) CFO said they expect to release data from the Covid-19 vaccine trial next week and that the company is very optimistic that they will release a very robust data set. The J&J vaccine is touted as a “game changer” in the vaccination race, requiring only one injection to acquire full immunity.

This has benefited the loonie against its G10 FX safe-haven counterparts. However, CAD has lagged against NZD, GBP and AUD, probably due to the fact that crude oil markets have not recovered in line with risk appetite; The crude oil space is grappling with the risks of increasingly tight global travel crackdowns as countries take steps to prevent the international spread of new Covid-19 variants.

Key technical levels