- A combination of factors prompted some fresh selling around USD/CAD on Wednesday.
- Concerns about surging COVID-19 cases in the US continued weighing on the greenback.
- A modest uptick in oil prices underpinned the loonie ahead of Canadian inflation figures.
The intraday USD selling bias picked up pace during the early European session and dragged the USD/CAD pair to the lower end of its weekly range, around the 1.3070 region in the last hour.
The pair failed to capitalize on the previous day's positive move, instead witnessed some fresh selling on Wednesday and was being pressured by a weaker tone surrounding the US dollar. Despite the latest optimism around promising vaccine trials, investors remain concerns about the potential economic fallout from the imposition of new coronavirus restrictions in several US states. This, in turn, kept the USD bulls on the defensive and was seen as a key factor exerting pressure on the USD/CAD pair.
Apart from a weaker greenback, a modest pickup in crude oil prices underpinned the commodity-linked currency – the loonie – and further contributed to the USD/CAD pair's intraday slide. Oil prices remained well supported by hopes that OPEC and its allies will delay a planned rise in output. This helped offset fears over reduced fuel demand on the back of the continuous surge in new COVID-19 cases and the overnight API report, which showed that US crude stockpiles rose more-than-expected, by 4.2 million barrels last week.
Meanwhile, the downside remains cushioned, at least for the time being, as investors now look forward to the latest Canadian consumer inflation figures for a fresh impetus. The data is scheduled for release during the early North American session, which along with a scheduled speech by the Bank of Canada (BoC) senior deputy governor Carolyn Wilkins will influence the Canadian dollar. Traders might further take cues from second-tier US macro releases.
Wednesday's US economic docket features the release of housing market data – Building Permits and Housing Starts. Apart from this, developments surrounding the coronavirus saga and the broader market risk sentiment might further contribute to produce some short-term trading opportunities on Wednesday.
Technical levels to watch
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