USD/CAD refreshes session tops, around 1.2070, bullish oil prices capping gains
- USD/CAD gained some positive traction on Thursday amid a broad-based USD strength.
- A modest uptick in the US bond yields, cautious mood extended some support to the USD.
- Bullish oil prices might continue to underpin the loonie and cap the upside for the major.
The intraday USD buying picked up pace during the early European session and pushed the USD/CAD pair to fresh daily tops, around the 1.2065-70 region in the last hour.
A combination of supporting factors provided a goodish lift to the US dollar on Thursday. This, in turn, was seen as a key factor that assisted the USD/CAD pair to regain positive traction and reverse the previous day's modest losses.
Investors have grown nervous about whether a surprisingly stronger US economic data could force the Fed to start tapering its bond-buying program sooner rather than later. This, in turn, prompted some short-covering move around the USD.
The greenback was also supported by a modest uptick in the US Treasury bond yields. Apart from this, a softer risk tone around the equity markets further benefitted the greenback's safe-haven status and extended some support to the USD/CAD pair.
Bulls are now be looking to build on this week's bounce from the vicinity of the 1.2000 psychological mark, or the lowest level since May 2015. That said, bullish crude oil prices might act as a headwind for the USD/CAD pair and cap the upside.
In fact, WTI crude oil climbed to the highest level since October 2018 amid expectations of a surge in fuel demand in the US, Europe and China. This underpinned the commodity-lined loonie and might hold traders from placing aggressive bullish bets around the USD/CAD pair.
market participants now look forward to Thursday's US economic docket – featuring the releases of the ADP report on private-sector employment, the Initial Weekly Jobless Claims and ISM Services PMI. This, along with the US bond yields, will influence the USD.
Apart from this, the broader market risk sentiment and oil price dynamics might further contribute to produce some short-term trading opportunities around the USD/CAD pair.
Technical levels to watch