- The safe-haven attraction of USD in play as pandemic jitters continues to weigh on risk mood.
- Oil prices fall and drag CAD.
- US political uncertainty and BOC-wait caps the upside.
USD/CAD continued yesterday’s late rebound of 40 pips from 1.3142 and trades near 1.3200 today. A sustained move above 1.3200 will attract more buyers in the pair once the Canadian central bank announces its policy on Wednesday.
The concerns regarding coronavirus-related restrictions affecting the economic recovery have renewed after the recent surge in the pandemic cases. The lack of progress regarding the US fiscal stimulus has also dampened the risk mood in the market.
The weak risk-tone has attracted inflows to haven-linked assets like the US dollar and helped the USD/CAD trading sentiments today.
Crude-oil price weakness hurts the CAD and it has helped the USD/CAD to cement its strength. Oil prices fell by two Percent as the jump in COVID-19 cases triggered worries of demand slowdown and oversupply.
The uncertain US political situation and the upcoming Canadian central bank announcement prevented the USD/CAD traders from taking aggressive positions.
The market participants are not expecting any significant changes in the policy and will be eyeing the economic growth updates for a possible trigger. The updates and the follow-up press conference might provide some meaningful trading action in the USD/CAD today.