- The USD / CAD showed no firm directional bias and remained within a range.
- The weakening of the Fed’s negative rate probabilities and the risk trend benefited the dollar.
- A good recovery in oil prices supported the loonie and limited the rise.
The USD / CAD pair was seen oscillating in a narrow trading band around the 1.4100 mark and consolidated its recent gains at weekly highs. A combination of divergent forces did not give the pair significant momentum and led to moderate / limited commercial action by the lineup during the first European session on Thursday.
The American dollar remains well supported by the fact that the Fed President Jerome Powell, in a highly anticipated speech Wednesday, rejected the idea of negative interest rates. This comes amid fears over the second wave of coronavirus infections and the loss of hope for a rapid economic recovery. This, in turn, weighed on investor sentiment and also benefited the perceived safe haven status of the greenback.
On the other hand, the loon was supported by a satisfactory rise in oil prices, up more than 2% for the day. Oil prices rose slightly on Thursday in the latest optimism about Saudi Arabia’s commitment to further deepen production cuts in June and an unexpected drop in US crude inventories. The US Energy Information Administration (EIA) has reported a 745,000 barrel drop in inventories.
It will now be interesting to see if the pair is able to gain significant traction or if the lack of new purchases suggests that this week’s strong positive movement of more than 200 pips from the 1.3900 mark may already be happening. be out of breath.
In the future, market players are now eagerly awaiting the initial US weekly unemployment claims, which could influence price dynamics in USD. This, combined with the publication of the BoC Financial System Review and a speech scheduled by BoC Governor Stephen Poloz, is expected to generate significant business opportunities later in the start of the North American session.