- USD / CAD regains positive traction on Friday and moves away from three-week lows.
- A modest pickup in demand for the USD is considered a key factor driving the pair higher.
- The drop in crude oil prices weighs on the CAD and supports the upward movement of the pair.
The pair USD / CAD moves higher during the European session on Friday and hits new three-day highs, around the 1.2750 region.
A combination of factors has helped the pair regain positive traction on the last day of the week and take advantage of the previous day’s bounce from the three-week lows, around the 1.2660 region. As investors looked beyond disappointing initial weekly US jobless claims, a good recovery in US Treasury yields helped reignite demand for the US dollar.
The US bond market has continued to react strongly to Approval Prospects for the $ 1.9 Trillion Coronavirus Stimulus Package proposed by US President Joe Biden. This, coupled with a cautious sentiment around equity markets, has offered additional support to the safe-haven US dollar and extended some support to the USD / CAD pair.
Apart of this, a decline in crude oil prices has weighed on the loonie, a currency pegged to commodity prices, and further contributed to the USD / CAD rally during the first half of trading action on Friday. Oil prices recede further from 13-month highs. OPEC cut its forecast for fuel demand and the International Energy Agency said the market was still oversupplied.
Market participants are now awaiting the US economic calendar, featuring the only release from the University of Michigan consumer sentiment index. Data, broader market risk sentiment, and US bond yields could influence the USD during the American session. Investors will follow the signs of oil price dynamics to seize some short-term opportunities.
USD / CAD technical levels
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