USD/CAD pulls back to 1.2450 amid fresh risk-off

• USD/CAD recovers from the weekly low following two days of declines.
• US dollar pulls back amid the political drama at the US Senate, coronavirus updates.
• WTI remains mildly positive, US data, voting on the COVID-19 bill become the key.

With the risk-off re-entering the markets, USD/CAD bounces off the weekly low to 1.4250, up 0.40%, during the initial treading hours of Thursday. Uncertainties surrounding the US COVID-19 Bill as well as coronavirus updates could be cited as the main catalysts for the latest risk aversion.

Despite agreeing over the $2.2 trillion aid package the previous day, the US policymakers are unclear about the execution while the Democrats show disappointment and signal amendments. The same could delay the final voting on the much-awaited stimulus bundle that the Republicans signaled to arrive soon.

On the other hand, coronavirus (COVID-19) worries are also drawing fresh strength from Japan and the UK. The latest stats from Britain suggest the pandemic is ignoring the government’s efforts to combat the disease while the US continues to struggle with the virus hitting New York.

WTI seems to take clues from the geopolitical tension between the west and the Middle East as well as the latest inventory numbers but seems to weigh on the Loonie pair.

While portraying the risk-tone the US 10-year treasury yields slip five basis points (bps) to revisit near 0.80% mark whereas stocks in China and Japan turn negative again.

Moving on, traders could keep eyes on the US Senate developments and the virus updates for the short-term direction while the likely sharp run-up in the US Jobless Claims makes the weekly reading important.

Technical Analysis

The pair needs to regain its place beyond a 10-day SMA level of 1.4280 to revisit 1.4350 and 1.4530 numbers to the north. Until then, odds of its drop to the sub-1.4000 region can’t be ruled out.