- A combination of factors did not help USD/CAD to capitalize on its modest intraday gains.
- A rebound in oil prices underpinned the loonie and capped the upside amid renewed USD selling.
- A recovery in risk sentiment, retreating US bond yields weighed on the safe-haven dollar.
The pair USD/CAD trimmed some of its intraday gains and was last seen trading around 1.2700, up 0.20% ahead of the American session.
The pair attracted some buying on Thursday and built on the overnight bounce from the 1.2665 area, or the weekly low, although a combination of factors capped any significant upside. The escalation of the conflict between Russia and Ukraine pushed up crude oil prices and supported the commodity-linked Canadian dollar. This coupled with the onset of fresh US dollar selling acted as a headwind for the USD/CAD pair.
Russian claims of a partial troop withdrawal from the Ukraine border earlier this week were countered by Western governments, saying there were no signs of de-escalation on the ground. Apart from this, reports of bombing in eastern Ukraine boosted oil prices, although expectations about the return of Iranian oil on the markets kept any significant rise at bay, at least for the time being.
On the other hand, the USD struggled to preserve its modest intraday gains and was met with fresh supply amid falling US Treasury yields. Also, risk sentiment recovered somewhat after that the latest satellite image showed that Russia withdrew some equipment from the border with Ukraine. This, along with the less dovish FOMC Minutes released on Wednesday, weighed on the safe-haven dollar.
Market participants are now eagerly awaiting the US economic calendar, which includes the Philadelphia Fed manufacturing index, weekly initial jobless claims and housing market data. This, along with US bond yields, will weigh on the USD and give the USD/CAD pair some momentum. Apart from this, traders will follow the signs of the oil price dynamics to take advantage of some significant opportunities around the pair.
Additional technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
