- USD/CAD near critical support 1.3045-40.
- Global optimism drives oil, strengthening loonie.
- US data eyed for further clues.
The USD/CAD trades weak today as oil prices helped the loonie while the US dollar drifts on increased chances of further Fed action and successful development of the coronavirus vaccine.
The pair trades around 1.3045-40, strong horizontal support, exhibiting negative bias throughout the early European trading.
USD/CAD traded in a two-way mode yesterday, rebounding from the intraday lows after the release of upbeat US PMI November numbers. Still, the rebound met with resistance from a firm CAD underpinned by the oil prices strength.
Today, dollar bears were back in action as speculations are strong about further monetary loosening by the Fed in its December meeting. Also aiding the bears are the risk-on mood from the potential early rollout of COVID-19 vaccine, hitting the safe-haven appeal of the currency.
The global economic recovery optimism has been further boosted by AstraZeneca announcement of 70-90 Percent effectiveness for its vaccine in pivotal trials. Crude oil has been pushed to the highest level since March and in turn, strengthened CAD – thus weakening the USD/CAD.
If the pair stays below 1.3040 support zone, bears will try to push it below the 1.3000 psychological mark. And further weakness means monthly swing lows around 1.2930-25 will be in play.
In the day ahead, traders will eye the US Conference Board’s Consumer Confidence Index and Richmond Manufacturing Index along with the broad market sentiments for the market direction.
At the time of writing, one US dollar buys 1.3027 Canadian dollars, down -0.40% as of 9:26 AM UTC.