- USD / CAD does not extend yesterday’s losses.
- The US dollar index rebounds to a 14-day low after a risk reset.
- WTI bulls take a break around the two month high.
- BOC’s Lane excluded negative rates the day before.
The USD / CAD raised the auction to almost 1.3923, up 0.15% on a day, during the first opening hour of Tokyo on Thursday. The pair’s recent recovery could be attributed to the withdrawal of the US dollar from the multi-day low, amid new risk challenges, as well as a pause in the WTI oil rally near the two-month high.
Not only are the worrying levels of global coronavirus (COVID-19) figures, but a general increase in figures for the American virus seem to have negatively affected the initial sense of risk in the market. Optimism could also weigh on the latest news from the Washington Post suggesting a new US-China battle.
Elsewhere, WTI bulls are pausing around the highest since March 13, as new risk challenges have pushed the greenback back from the lows of several days, which in turn curbs the rise in oils.
That said, the US dollar index (DXY), a greenback gauge against the major currencies, posted gains of 0.15% on a day while going to 99.33 at the time of the press.
It should be mentioned that the pair’s decline on Wednesday can be attributed to the broad sense of risk in the market amid hopes of recovery and the proximity of the cure for the virus. While joining the league to support further easing but not negative rates, Bank of Canada (BoC) deputy governor Timothy Lane said on Wednesday that the BoC’s decision was not to drop rates again. It should also be noted that the last few minutes of the FOMC have reiterated the favors of current monetary policy while again excluding negative rates.
Although trade / virus updates will likely keep traders busy before the US session, the change in ADP employment in Canada, the New Housing Price Index and preliminary US PMIs for May will be key to monitor thereafter.
Even if the 50-day EMA around 1.3950 restricts the immediate rise in the pair, the 1.3870 / 50 zone including marked lows since April 13, 2020, can limit the declines in the short term.