- USD / CAD is witnessing short coverage on Wednesday, although it lacks continuation.
- USD bulls remain defensive amid optimism over the COVID-19 vaccine.
- Rising oil prices support the CAD and help limit the pair’s gains.
The pair USD / CAD It has reached an intraday high of 1.3028 during the Asian session on Wednesday, although it has lacked continuation and has rapidly retraced some pips. At the time of writing, the pair still remains positive on the day, around the 1.3010 region.
The pair has managed to regain some positive traction during Wednesday’s Asian session and has recovered part of the sharp drop of the previous day to two-week lows. The rally has lacked an obvious fundamental catalyst and could only be attributed to some short covering, although a combination of factors has limited the rise in the USD / CAD pair.
The US dollar is being affected by the prevailing optimistic market sentiment, which remains supported by optimism about a possible early launch of the coronavirus vaccine. Further, Clarity on the US political front has further boosted investor confidence and has weighed on the safe-haven US dollar.
Meanwhile, Progress towards a vaccine for COVID-19 has revived hopes for a rapid recovery in global fuel demand. This, in turn, has driven WTI crude oil prices above the $ 45 level for the first time since March, which has benefited the Canadian dollar, a currency linked to commodity prices, and has contributed even more to limit the attempt to recover the USD / CAD pair.
Market participants are now waiting for a lot of top-tier US macro data to get some short-term trading opportunities. Featured on Wednesday’s US economic calendar are the releases of the preliminary GDP report (second estimate), durable goods orders, initial weekly jobless claims and the final index of consumer sentiment from the University of Michigan for November.
However, the key focus will be on the minutes of the last FOMC meeting, which will be analyzed for the possibility of further easing of monetary policy by the Fed in December. The Fed’s monetary policy outlook will play a key role in influencing short-term USD price dynamics and help investors determine the next directional move for the USD / CAD pair.
USD / CAD technical levels