USD/CAD consolidates in a range, just above mid-1.3000s
- USD/CAD consolidated the previous day’s goodish bounce from multi-month lows.
- The USD remained supported by Tuesday’s better-than-expected economic data.
- Bullish oil prices underpinned the loonie and capped the upside, at least for now.
The USD/CAD pair extended its sideways consolidative price action through the early European session and remained confined in a range, just above mid-1.3000s.
A combination of diverging forces failed to assist the pair to capitalize on the previous day's goodish bounce of around 90 pips from sub-1.3000 levels or the lowest level since January. The prevalent bullish tone surrounding crude oil prices undermined the commodity-linked currency – the loonie – and capped the USD/CAD pair below the 1.3100 mark.
Meanwhile, the downside remained cushioned amid a modest pickup in the US dollar demand. Tuesday's better-than-expected US ISM Manufacturing PMI revived hopes of economic recovery and stemmed the recent USD bearish momentum. However, expectations that the Fed will keep rates lower for longer might kept a lid on any strong gains for the greenback.
This makes it prudent to wait for some strong follow-through buying before confirming that the USD/CAD pair might have bottomed out in the near-term and positioning for any further gains. Market participants now look forward to the release of the US ADP report for some short-term trading impetus later during the early North American session.
Meanwhile, the key focus will remain on the US monthly jobs report, popularly known as NFP. This, along with Canadian employment details, also scheduled on Friday, will now play a key role in determining the USD/CAD pair's next leg of a directional move.
Technical levels to watch