- The USD / CAD fell slightly on Wednesday and broke two consecutive winning streak days.
- The drop did not seem to be affected by the drop in oil prices, which tend to undermine the loonie.
- Negative speculation on Fed rates kept dollar increases defensive before Powell’s speech.
The USD / CAD pair fell slightly during Wednesday’s Asian session and was last seen hovering around the lower end of its daily trading range, mid-1.4000.
The pair encountered some supply on Wednesday, breaking two consecutive winning streak days and so far appears to have blocked this week’s recovery movement from the 1.3900 mark. The pullback lacked an obvious catalyst and seems more likely to attract a drop in purchases amid a weaker tone surrounding oil prices.
Fears that a premature easing of closings would lead to a second wave of deadly coronavirus outbreaks overshadowed Saudi Arabia’s commitment to further deepen cuts in oil production in June. This, in turn, resulted in a modest decline in oil prices, which could undermine the loon and provided some support to the major.
On the other hand, the American dollar remained on the defensive following speculation that the Fed could be forced to push interest rates below zero. Bets on the Fed’s negative interest rates have further increased after US President Donald Trump asked the US central bank on Tuesday to further soften policies to support the US economy.
It should be noted that several FOMC members – including the chairman of the St. Louis Fed, James Bullard and the chairman of the Chicago Fed, Charles Evans – have spoken out against the idea of negative interest rates. Therefore, the focus will be on the scheduled speech by Fed President Jerome Powell at the start of Wednesday’s North American session.
Heading for the main event risk, the US economic file – highlighting the publication of Producer price index (PPI) – could influence price dynamics in USD and help traders seize short-term opportunities.