- USD / CAD is consolidating within a narrow range below the 1.3100 level on Friday.
- The nervousness around COVID-19 and the pessimistic outlook from the Fed weighs on the USD and limits the rise.
- A modest decline in crude oil prices weighs on the CAD and offers some support to the pair.
The pair USD / CAD it is struggling to find a firm directional bias and oscillates between tepid gains and minor losses below the 1.3100 level at the start of the European session. At time of writing, the pair falls to daily lows just above 1.3050.
A combination of divergent factors has failed to provide significant momentum to the pair and has led to a moderate and limited price action within a range on the last trading day of the week. The Concerns about the economic consequences of the new COVID-19 restrictions in various US states have kept the US dollar bulls on the defensive. This, in turn, has been seen as a key factor limiting the rise in the USD / CAD pair.
The dollar has seen even more pressured by speculations that the Fed will ease monetary policy. That said, a further downward movement in stock markets has offered some support to the safe-haven USD. Global risk sentiment has taken a hit on Friday after US Treasury Secretary Steven Mnuchin called for an end to relief due to the coronavirus pandemic for struggling companies.
Apart of this, a modest decline in crude oil prices has weighed on demand for the loonie, a currency pegged to commodity prices, and has been further involved in limiting any significant decline for the USD / CAD pair. The continued rise in new coronavirus cases around the world has reduced prospects for a rapid recovery in fuel demand and it has put some downward pressure on oil prices.
Market participants are now waiting for the release of Canada’s monthly retail sales data to get some momentum. This, along with broader market risk sentiment and developments around the coronavirus saga, will influence USD price dynamics and help investors seize some short-term opportunities.
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