USD/CAD slips below 1.3600 as risk-tone recovers, BOC’s Macklem eyed
- USD/CAD takes a U-turn from 1.3630 to snap three-day winning streak.
- Risk-tone recovers as US President Trump refrains from further attacks on China.
- Rising American virus numbers confront receding statistics from Beijing.
- US second-tier data, comments from BOC’s Mecklem and risk catalysts to be followed for fresh impulse.
USD/CAD recovers from intraday low to regain 1.3600 during the pre-European session on Monday. Even so, the quote part ways from the previous three-day run-up amid broad risk reset. Traders may now keep eyes on the US statistics, as well as a speech from the BOC Governor Tiff Macklem, for further direction. Additionally, factors affecting the market’s risk-tone sentiment will also be the key to watch.
A weakness in the coronavirus (COVID-19) data from mainland China and Beijing triggered the early-day recovery in the market’s mood. Also supporting the risk reset could be US President Donald Trump’s refrain from announcing punitive measures against China, in the Xinjiang issue.
However, strong virus figures from the US and China’s turning down of American meat from Tyson seems to keep weighing on the risks. Furthermore, US Secretary of State Mike Pompeo’s accusations that China behaving like a “rogue actor” adds a burden on the trading sentiment.
Against this backdrop, the US 10-year Treasury yields seesaw around 0.70% whereas stocks in Asia register mild gains after trimming the early-day losses by the press time. Furthermore, the US dollar index (DXY) also bears the burden of fears of the second virus waves in America while easing from three-week high to 97.75 as we write.
Other than the risk catalysts, recovery in Canada’s main export item crude oil also favors the Loonie against the greenback. The WTI oil benchmark crossed $40.00 during the early-Asian session to register back to back gains for three days.
Looking forward, US Chicago Fed National Activity Index and Existing Home Sales for May will precede the BOC Governor Mecklem’s speech. Although no major moves are anticipated due to the scheduled data/events, downbeat comments from the Canadian central banker, which is more likely, might renew downside pressure on the CAD.
Technical analysis
21-day EMA level of 1.3630 stalls the USD/CAD pair’s upside momentum past-monthly resistance line, now support, a break of which could quickly cross the previous week’s top near 1.3685. Meanwhile, 200-day SMA joins the resistance-turned-support around 1.3575 to challenge the bears.