- USD/CAD fails to extends the previous day’s rebound, refreshes intraday low.
- Oil reacts to downbeat fundamentals, ignores USD pullback.
- Sellers also pay a little heed to chatter over Canadian elections.
- US data, qualitative factors may entertain traders amid anticipated lackluster session.
USD/CAD remains depressed around 1.2515, down 0.06% on a day, ahead of Friday’s European session.
The loonie pair buyers cheered the broad US dollar strength, marked the previous day, to snap a two-day downtrend before reversing from 1.2529 early in Asia.
While seeking catalysts, the US dollar pullback could be more related than the prices of Canada’s biggest export item, WTI crude oil, as well as concerns that Canada will have a general election in September.
For oil, downbeat demand forecasts from the International Energy Agency (IEA) and Goldman Sachs’ forecast of OPEC+ spare capacity will be fully normalized by spring 2022 weigh on the black gold. Also on the same line could be the Financial Times (FT) news saying, “Hopes rise that Iran hardliner will rejuvenate nuclear deal.”
Furthermore, vaccine optimism and market fears of the Fed’s tapering also weigh on the oil prices, which should have fueled the USD/CAD prices, but does not for now.
Read: WTI stays pressured below $69.00 on firmer USD, oil demand fears
Amid these plays, S&P 500 Futures remain directionless whereas the US 10-year Treasury yields drag the US Dollar Index (DXY) to the south, with mild losses.
Moving on, a light calendar could restrict USD/CAD moves but the current USD pullback may extend amid mixed catalysts. Hence, today’s US Michigan Consumer Sentiment Index for August, expected to remain unchanged near 81.2, will be important to watch for fresh impulse.
Technical analysis
USD/CAD seesaws around 200-SMA on the four-hour chart (4H) while raising doubts on the rising wedge confirmation, portrayed on Thursday. In addition to lacking a clear downside below the 200-SMA level of 1.2515, an ascending support line from June 23, close to 1.2480, also challenges the pair sellers. Meanwhile, the pair sellers remain hopeful unless the quote bounces back beyond 1.2545, defying the bearish pattern.