- USD / CAD struggled to capitalize on yesterday’s strong rebound from multi-month lows.
- The good mood in the market weighed on the safe haven USD and capped the pair’s rise.
- A slightly softer tone around oil prices undermined the loonie and helped limit larger losses.
USD / CAD extended its sideways consolidation move at the start of the European session and remained confined in a range, around the 1.3220 region.
A combination of factors did not help the pair capitalize on the previous day’s positive rebound from multi-month lows and led to moderate / range-linked price action on Tuesday. The good mood in the market weighed on the relative safe-haven status of the US dollar, which in turn was seen as one of the key factors in the USD / CAD pair’s rise.
Global risk sentiment has remained well supported by positive developments on a potential vaccine and treatment for the highly contagious coronavirus disease. It should be noted that the Trump administration is considering accelerating the rollout of an experimental COVID-19 vaccine in the United States ahead of the November 3 election.
In addition to that, the US FDA on Sunday issued an emergency clearance to use blood plasma from recovered patients to treat some patients suffering from the COVID-19 virus. Even a strong rally in US Treasury bond yields failed to impress US dollar bulls or provide significant boost, although it could help limit larger losses.
Meanwhile, a slightly lower tone surrounding crude oil prices undermined the commodity-linked currency – the loonie – and further helped to limit any significant decline in the USD / CAD pair. However, it will be prudent to wait for solid follow-up buying before traders begin to position themselves for any further appreciation.
Market participants are now eagerly awaiting the release of the Conference Board’s Consumer Confidence Index, which could influence the price dynamics of the USD and generate near-term trading opportunities. The main focus, however, will remain on Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium later this week.