USD/CAD takes a U-turn from 1.2597 to recently around 1.2585 in a fresh downside during Wednesday’s Asian session. In doing so, the loonie pair fizzles the previous day’s bounce-off 34-month low as WTI and US dollar’s pause join hopes of upbeat US-Canada relations to favor the bulls.
Canadian PM Justin Trudeau’s latest optimism over the Ottawa-Washington relations seemed to have helped the Canadian Dollar buyers off-late. In his firm bilateral talks with US President Joe Biden, Mr. Trudeau eyes strong US-Canada ties versus the previously strained relations during the Trump administration. Earlier on Tuesday, the Bank of Canada (BOC) Governor Tiff Macklem struggles to convince traders of the nation’s vaccine capacities after confirming economic challenges.
Also helping the USD/CAD sellers could be a halt in the WTI’s weakness following downbeat private inventory data. The energy benchmark, also the key to Canada’s exports, eased from the highest since January 2020 the previous day amid the US dollar’s recovery. The pullback moves gained extra strength after the American Petroleum Institute (API) flashed inventory build.
On the other hand, the US dollar index (DXY) also fails to keep its recovery moves that took clues from Fed Chair Jerome Powell’s latest testimony. The reason could be traced from a lack of major catalysts and the US central banker’s inability to placate the bond bears. Also contributing to the US dollar weakness could be the AstraZeneca comment suggesting 94% effectiveness in reducing hospitalization during real-life usage.
Amid these plays, S&P 500 Futures mark mild losses and the US 10-year Treasury yields also dropped 2.4 basis points to 1.34% by press time.
Looking forward, a lack of major data/events will keep challenging the USD/CAD traders during the Asian session. However, any major updates for the US stimulus and/or virus/vaccine shouldn’t be ignored.
Unless providing a daily close beyond the monthly resistance line, at 1.2690 now, USD/CAD buyers shouldn’t take entries.