- USD/CAD came under pressure at higher levels and pulled back over 80 pips from the daily high.
- US political uncertainty sparked the unwinding of some USD bullish bets.
- Tumbling crude oil prices undermined the loonie and could help limit further losses for the pair.
- USD/CAD extended its selloff falling below 1.33round-figure hitting a daily low.
The pair failed to capitalize on its push higher, coming under pressure and retreating over 80 pips from the daily high, around 1.3370. The move lower lacked any clear fundamental catalyst and could be down to the unwinding of some USD long trades.
Even though fears remain over the economic impact of more coronavirus- lockdowns in Western countries, rising political jitters over outcome of the US presidential election has kept USD buyers from placing fresh trades. A small ick higher in US Treasury bond yields was also shrugged off..
Weak crude oil prices could continue to undermine demand for the commodity-linked Canadian Dollar .. Which limited the downside for the USD/CAD pair, at least for now. Cautious should be taken before taking any short position.
Oil prices skidded lower, extending losses from the previous week and dragging oil to its lowest level since May. Fears are growing that stricter measures to stem the spread of covid could see oil demand deteriorate further. Better than expected Chinese manufacturing PMIs helped to partly offset the negative factors capping losses.
US ISM Manufacturing PMI is up next. The data, along with any covid developments and the broader market sentiment, will drive the USD.