USDCAD pair saw two-way price action on Friday. While price action was mostly in favor of US Greenback with the rally taking price well above 1.33 handle better than expected Canadian jobs data caused the pair to see a sharp drop all the way below the mid-1.32 handle. US Dollar has been gaining positive momentum since the trading session started for the month of February. However dovish outlook on U.S. Fed’s rate hike plans for 2019 continues to limit the upside move of the dollar in the broad market. While Dollar saw a sharp boost on U.S. T-Yields seeing a short bullish boost, the support from same died down before the end of last week as yields the upsurge in U.S. bond yields came to an end.
Weak Crude Oil Price Helped USD Recover Previous Session’s Loss
Since trading session opened for the day, the pair saw slow but steady recovery price action as USD bulls were supported by the strength of the US dollar in the broad market. Further, optimism surrounding news of Sino-U.S. trade talks scheduled to occur later this week added support to US Dollar in the broad market. The crude oil price fell to $52 per barrel on U.S. macro data which hinted that US crude oil producers added more rigs and news that Russia is likely to boost production going against OPEC’s production cut enforcements. However, news for crude oil refinery unit having to be closed on account of yesterday’s fire accident helped limit loss.
Weaker crude oil is a dovish factor for the Canadian Dollar as Loonie is a commodity (crude oil) linked currency. As Crude oil declined in the broad market, US dollar managed to breach 1.33 handle once again, However, strong resistance near 1.33 handle and lack of fundamental support resulted in pair falling below 1.3300 handle but trade in consolidative action well near said price level. As of writing this article, USDCAD pair is trading at 1.3312 up by 0.35% on the day. Given a clear lack of macro data updates from both sides of the calendar, price action for the day ahead is likely to be influenced by broad-based USD price dynamics and crude oil price in the broad market.
This article was originally posted on FX Empire
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