- USD/CAD attracted some dip-buying on Friday amid renewed USD strength.
- An escalation in the Russia-Ukraine conflict benefitted the safe-haven USD.
- A pullback in oil prices undermined the loonie and further extended support.
The USD/CAD pair reversed intraday losses and climbed to the top end of its daily trading range, back above the 1.2800 mark during the early part of the European session.
Following the overnight pullback from the two-month high and an early downtick on Friday, the USD/CAD pair attracted fresh buying near the 1.2770 region and was supported by renewed US dollar strength. The worsening situation in Ukraine. This was seen as a key factor that continued acting as a tailwind for the safe-haven greenback and assisted the pair to regain some traction.
In the latest developments, reports indicated that Russian forces have entered the Obolon district in Kyiv. According to the Kyiv Independent, the Ukrainian military is fighting off the Russian troops and there are also mentions of Russian air missiles spotted in north of Kyiv. This, in turn, kept investors on the edge and kept a lid on the early optimistic move in the markets.
Apart from this, the intraday pullback in crude oil prices undermined the commodity-linked loonie and provided modest lift to the USD/CAD pair. The intraday uptick, however, lacked follow-through buying hopes for a likely Russia-Ukraine ceasefire. Hence, the market focus will remain on the outcome of the NATO summit and fresh developments surrounding the Russia-Ukraine saga.
Friday's US economic docket highlights the release of the Fed's preferred inflation gauge – the Core PCE Price Index – and Durable Goods Orders, due later during the early North American session. The data, however, might do little to influence the USD or provide any meaningful impetus, leaving the USD/CAD pair at the mercy of the incoming geopolitical headlines.