USD/CAD eases from tops, still comfortable above 1.3300 mark
- USD/CAD gains some positive traction on Wednesday, snapping two days of losing streak.
- Hopes of a US economic recovery, surging US bond yields extended some support to the USD.
- A pickup in crude oil prices underpinned the loonie and capped the upside for the major.
The USD/CAD pair retreated around 25-30 pips from daily tops, albeit has still managed to hold with modest gains around the 1.3325 region.
The pair built on the previous day's late rebound from the 1.3270 region and gained some positive traction on Wednesday, snapping two consecutive days of the losing streak. The momentum was sponsored by the prevalent bid tone surrounding the US dollar, albeit lacked any strong follow-through amid a modest pickup in crude oil prices.
A decline in COVID-19 hospitalizations now seemed to have revived hopes of a US economic recovery. This, coupled with the overnight strong upsurge in the US Treasury bond yields further boosted the greenback. In fact, the yield on the benchmark 10-year US government bond recorded its biggest single-day gain in two months on Tuesday.
However, the deadlock in the US Congress over the next round of the fiscal stimulus measures held the USD bulls from placing aggressive bets. Adding to this, a positive tone around oil prices underpinned the commodity-linked currency – the loonie – and further collaborated towards capping any strong gains for the USD/CAD pair, at least for now.
Moving ahead, market participants now look forward to the release of the latest US consumer inflation figures for July. The data might influence the USD price dynamics, which along with the weekly US crude oil inventories data might produce some meaningful trading opportunities later during the early North American session on Wednesday.
Technical levels to watch