- CAD assisted by pro-risk mood.
- Fed minutes on Wednesday is critical for the US dollar.
- Vaccine-hopes stimulate risk bulls.
USD/CAD bears had the upper hand during the early European session today, pushing the pair to the lower end of its daily trading range near mid-1.3000s.
Today’s price action is in contrast to the 60-pips intraday bounce on Friday; USD/CAD bears found bulls wanting in strength near 1.3100 today.
The commodity-linked CAD attracted demand as OPEC+ output expectations along with the possibility of a coronavirus vaccine helped the case for higher oil prices.
The Fed stimulus expectations have affected the demand for the US dollar, along with the current upbeat market sentiments. The traders have started to price in further Fed dovish action as early as the December meeting. The US states had resorted to stringent restrictions in recent weeks to curtail the pandemic spread and it has put pressure on the Fed to act faster than earlier thought. Hence, the release of Fed minutes on Wednesday will drive the action surrounding the US dollar.
The flash US Manufacturing and Services PMIs due today and the broader market risk sentiments will dictate the trading action in the USD/CAD in the day ahead.
If follow-through selling below 1.3040-35 comes in the pair, then bears might press their advantage to push it down to the 1.3000 psychological mark. Further downside momentum in USD/CAD could test monthly swing lows near 1.2930-25.
At the time of writing, one US dollar buys 1.3051 Canadian dollars, down -0.30% as of 10:47 AM UTC.