The USD/CAD pair edged higher through the early European session and climbed back closer to weekly tops, albeit struggled to move back above the 1.3100 marks.
A combination of supporting factors assisted the pair to catch some fresh bids on Thursday and build on this week’s modest bounce from sub-1.3000 levels, or multi-month lows. The US dollar added to its recovery gains and moved further away from two-year lows set on Tuesday.
The USD rebound was tied to upbeat US macro data, which showed that manufacturing sector activity accelerated to a nearly two-year high in August amid a surge in new orders. This, in turn, helped the USD bulls to largely ignore Wednesday’s weaker than expected ADP report. Meanwhile, a goodish pickup in the US Treasury bond yields extended some additional support to the greenback.
Apart from this, the ongoing slide in crude oil prices undermined the commodity-linked currency – the loonie – and remained supportive of the USD/CAD pair’s uptick. Oil prices languished near multi-week lows on Thursday amid worries about falling demand in the US and sluggish economic recovery from the coronavirus pandemic.
Despite the supporting factors, the USD/CAD pair seemed struggling to capitalize on the move. The lack of any strong follow-through buying interest warrants some caution for bullish traders and positioning for any meaningful near-term appreciating move.
Market participants now look forward to the US economic docket, highlighting the release of ISM Non-Manufacturing PMI for some impetus. The key focus, however, will remain on Friday’s monthly employment details from the US and Canada. The headline US NFP print will play a key role in influencing the near-term USD price dynamics and assist traders to determine the USD/CAD pair’s near-term trajectory.
USD/CAD LONG (Buy)
ENTER AT: 1.31061