USD/CAD flirts with daily tops, just below 1.2600 mark
- USD/CAD caught fresh bids during the early North American session amid a modest USD bounce.
- COVID-19 jitters took its toll on the risk sentiment and helped offset disappointing US macro data.
- Concerns about slowing fuel demand undermined the loonie and remained supportive of the uptick.
The USD/CAD pair reversed an early North American dip to mid-1.2500s and rallied back to the top end of its daily trading range. The pair was last seen hovering around the 1.2585 region, up 0.3% for the day.
The US dollar struggled to preserve its intraday gains amid a sharp fall in the US Treasury bond yields. This, along with the disappointing release of the US Durable Goods Orders data, undermined the USD and exerted some pressure on the USD/CAD pair.
That said, the risk-off impulse in the markets acted as a tailwind for the safe-haven greenback and assisted the USD/CAD pair to regain positive traction. The global risk sentiment remained fragile amid worries about the Delta variant of the coronavirus.
Investors now seem worried that the ongoing spread of COVID-19 could derail the global economic recovery. This, in turn, took its toll on the global risk sentiment and also fueled concerns about slowing global fuel demand, which weighed on crude oil prices.
This was seen as a key factor that dented demand for the commodity-linked loonie and remained supportive of the bid tone surrounding the USD/CAD pair. It, however, remains to be seen if the bulls are able to capitalize on the move and reclaim the 1.2600 mark.
Hence, it will be prudent to wait for some strong follow-through buying before positioning for any further appreciating move. Next on tap is the release of the Conference Board's Consumer Confidence Index, though the focus remains on the FOMC policy meeting.
Technical levels to watch