USD/CAD climbs to three-day tops, inches closer to mid-1.2700s
- USD/CAD regained positive traction on Friday and moved away from three-week lows.
- A modest pickup in the USD demand was seen as a key factor driving the pair higher.
- Sliding crude oil prices undermined the loonie and remained supportive of the move.
The USD/CAD pair edged higher through the early European session and climbed to three-day tops, around the 1.2735-40 region in the last hour.
A combination of factors assisted the pair to regain positive traction on the last day of the week and build on the previous session's late rebound from three-week lows, around the 1.2660 region. As investors looked past Thursday's disappointing US Initial Weekly Jobless Claims, a goodish pickup in the US Treasury bond yields helped revive the US dollar demand.
The US bond market continued reacting strongly to the prospects for the passage of the US President Joe Biden's proposed $1.9 trillion coronavirus stimulus package. This, along with a cautious mood around the equity markets, extended some additional support to the greenback's perceived safe-haven status and extended some support to the USD/CAD pair.
Apart from this, a pullback in crude oil prices undermined the commodity-linked loonie and further contributed to the USD/CAD pair's uptick through the first half of the trading action on Friday. Oil prices retreated further from 13-month lows OPEC cut its fuel demand forecast and the International Energy Agency said the market was still oversupplied.
Market participants now look forward to the US economic docket, highlighting the only release of the Michigan Consumer Sentiment Index. The data, the broader market risk sentiment and the US bond yields might influence the USD later during the early North American session. Traders will further take cues from oil prices dynamics to grab some short-term opportunities.
Technical levels to watch