- USD/CAD gains some positive traction on Thursday, although it lacks bullish conviction.
- Weakening crude oil prices seem to weigh on the CAD and offer support to the pair.
- Falling US bond yields are keeping USD bulls on the defensive and acting as a headwind for the pair.
The pair USD/CAD it attracts some buying near the 1.2835-1.2830 area on Thursday and reverses some of the previous day’s pullback from the one-week high. The pair maintains its modest gains during the early European session and is currently trading near the 1.2850 areawith a rise of just 0.05% on the day.
The Weakening crude oil prices continue to weigh on the CAD, a currency linked to commodities, which in turn offers some support to the USD/CAD pair. Investors continue fearing slowing global growth will affect fuel demand. Furthermore, signs that the current supply shortage is easing, coupled with data from the previous day showing an unexpected rise in US crude and gasoline stockpiles, weighed on the commodity.
Despite the supportive factors, the USD/CAD pair seems to lack bullish conviction amid subdued US dollar price action. A weaker tone around US Treasury yields. turns out to be a key factor keeping USD bulls on the defensive. However, comments from several Fed officials this week hinting at further short-term interest rate hikes should help limit any significant decline in the dollar.
The fundamental background favors the bulls and supports the prospects for some short-term upward movement for the USD/CAD pair. Investors, however, seem reluctant and prefer to wait on the sidelines ahead of this week’s important macroeconomic data. The monthly NFP employment report for the US and Canada will be released on Friday, which should give a further directional boost to the USD/CAD pair.
Meanwhile, weekly US jobless claims will be released on Thursday. This, along with US bond yields, could influence demand for the dollar. Additionally, the oil price dynamics should allow traders to take advantage of some short-term opportunities around the USD/CAD pair.
USD/CAD technical levels
Source: Fx Street
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