USD/CAD remains heavy below 1.4000 with eyes on BOC’s Poloz

USD/CAD drops to the intraday low of 1.3956 amid the initial Asian session on Tuesday. In doing so, the Loonie pair extends the previous day’s losses.

Although the absence of the UK and the US traders keep markets confused at the start of the week, the broad risk-on sentiment, as well as upbeat prices of Canada’s main export item crude oil, exerts downside pressure on the quote.

Also contributing to the pair’s weakness could be Canadian PM Justin Trudeau’s recent address wherein the national leader announced additional measures, mostly benefiting workers, to stay positive during the post-coronavirus (COVID-19) working environment. It’s worth mentioning that PM Trudeau also marked his dissent to China’s Hong Kong Bill saying, “Canada remains concerned about a new Chinese bill that experts warn will destroy the last vestiges of the one country, two systems governance model for Hong Kong.”

Looking at the risk catalysts, the reopening of the major global economies has offered a ray of hope to the markets following the virus-led disappointment. Recently, California allowed churches to reopen with a limited congregation of below 100. Further to ease the fears could be US President Donald Trump’s refrain from opposing Hong Kong bill during his latest comments.

That said, US stock futures register noticeable gains to portray the market’s upbeat risk-tone sentiment. As a result, Dow Futures are up more than 200 points whereas S&P 500 Futures gain over 1.0% by the press time.

While the return of the full markets will be the key for today’s trading activity, testimony by the BOC Governor Stephen Poloz will also be important to watch. In his latest comments, the BOC Governor praised the central bank’s performance while citing inflation overreaching goal.

Technical analysis

The pair’s failures to cross 21-day SMA, currently around 1.4010, keeps directing the sellers towards the monthly low near 1.3870/65.