- USD / CAD rises on Thursday and recovers some of the heavy losses of the previous day.
- A softer USD prevents the pair’s bulls from opening aggressive positions and limits any strong moves to the upside.
- Moderate oil prices also do little to sway the CAD or provide a significant boost.
The pair USD / CAD moves higher at the start of the European session Thursday, although it has fallen a few pips from the daily highs of 1.2590. At the time of writing, the pair is up 0.14% on the day trading at 1.2573.
The pair managed to regain some positive traction on Thursday and has recovered a part of the heavy losses of the previous day, although it lacks a strong follow-up buy. A new recovery of risk appetite Global has continued to act as a headwind for the safe-haven US dollar and limited the rise in the USD / CAD pair.
Investors appeared to have sidelined concerns about potential economic consequences stemming from the spread of the highly contagious Delta variant of the coronavirus. This has been evident by a positive tone around equity markets, which has weighed on the demand for traditional safe haven currencies, such as the USD.
Secondly, the sharp rebound in crude oil prices the day before has continued to lend some support to the CAD, a currency pegged to commodity prices, and has helped limit any significant gains for the USD / CAD pair. Black gold has remained well supported by expectations that supplies will remain tight until the end of 2021.
Optimism has helped offset Wednesday’s bearish report from the Energy Information Administration, which confirmed a surprise increase in US crude supplies. That said, the new COVID-19 outbreaks have raised concerns about the short-term demand outlook for fuel and prevented investors from opening aggressive bullish positions around crude.
Market participants are now awaiting the US economic calendar, which includes the usual posting of initial weekly jobless claims and existing home sales. This, along with US bond yields, could influence the dollar. Investors will take more indications of oil price dynamics to seize some short-term opportunities around the USD / CAD pair.