- USD/CAD remained confined in a narrow band on the last trading day of the week.
- A softer USD failed to assist the pair to capitalize on this week’s attempted recovery.
- A sharp pullback in oil prices undermined the loonie and helped limit the downside.
The USD/CAD pair lacked any firm directional bias on Friday and seesawed between tepid gains/minor losses, around the key 1.3000 psychological mark through the early European session.
A combination of diverging forces failed to provide any meaningful impetus or assist the pair to capitalize on this week’s recovery move from the 1.2895 region. A softer tone surrounding the US dollar was largely offset by a sharp pullback in crude oil prices, which tend to undermine the commodity-linked loonie. This, in turn, led to the USD/CAD pair’s subdued/range-bound price action on the last day of the week.
The optimism over a potential vaccine for the highly contagious coronavirus disease continued boosting investors’ confidence and undermined the greenback’s relative safe-haven status. Adding to this, reviving hopes for additional US fiscal stimulus measures and a fresh leg down in the US Treasury bond yields exerted some additional pressure on the buck. This was seen as one of the key factors capping the upside for the USD/CAD pair.
The downside, however, remained cushioned amid the emergence of some heavy selling in the oil markets. In fact, WTI crude oil retreated further from the highest level since March and was down over 2% on Friday amid concerns about oversupply ahead of the OPEC+ ministers meeting on Monday. The group is planning to ease this year’s record supply cuts and could possibly move ahead with its plan to raise output by 2 million barrels per day in January.
Meanwhile, the USD/CAD pair’s inability to gain any follow-through traction warrants some caution before positioning for any further near-term appreciating move. That said, investors might still refrain from positioning for any big moves in either direction amid absent relevant market-moving economic releases, either from the US or Canada.