USD/CAD rebounds from weekly lows; up around 1.3535 region
- A combination of supporting factors assisted USD/CAD to gain some traction on Thursday.
- Worsening US-China relations dented the risk sentiment and benefitted the safe-haven USD.
- A modest pullback in oil prices undermined the loonie and remained supportive of the uptick.
The USD/CAD pair edged higher through the early European session and was last seen trading near the top end of its daily trading range, around the 1.3530-35 region.
The pair managed to defend, rather attracted some buying near the key 1.3500 psychological mark and recovered a part of the previous day's sharp intraday fall of over 110 pips. The uptick was supported by a combination of factors – a modest pickup in the US dollar demand and a weaker tone surrounding crude oil prices.
The latest optimism over a possible vaccine for the highly contagious coronavirus disease was overshadowed by the ever-increasing COVID-19 cases globally. This coupled with concerns about worsening US-China relations took its toll on the global risk sentiment and drove some haven flows towards the greenback.
Reports indicated that the US President Donald Trump would not impose further sanctions on top Chinese officials responsible for enacting Hong Kong's national security laws. However, a White House National Security Council spokesman said on Wednesday that Trump has not ruled out the possibility of further sanctions.
Meanwhile, oil prices retreated a bit on Thursday after OPEC and its allies (PEC+) agreed to taper record supply curbs from August. This, in turn, undermined demand for the commodity-linked currency – the loonie – and further collaborated to the USD/CAD pair's attempted recovery from weekly lows.
Market participants now look forward to the US economic docket, highlighting the release of monthly Retail Sales, Philly Fed Manufacturing Index and Initial Weekly Unemployment Claims. The data might influence the USD price dynamics, which along with the broader market risk sentiment might produce some short-term trading opportunities.
Technical levels to watch