USD/CAD bounces off lows, still in the red above mid-1.3300s ahead of US ISM PMI
- USD/CAD managed to rebound around 50-60 pips from an intraday low level of 1.3115.
- Renewed weakness in crude oil prices undermined the loonie and extended some support.
- Fed rate cut speculations, tumbling US bond yields weighed on the USD and capped gains.
The USD/CAD pair trimmed a part of its early losses and has managed to rebound around 60 pips from the early European session low level of 1.3115.
The pair to stalled its recent sharp pullback from nine-month tops (set on Friday) and attracted some dip-buying ahead of the 1.3100 round-figure mark amid some renewed weakness in crude oil prices.
USD/CAD influenced by a combination of factors
Oil prices failed to capitalize on the early attempted recovery move from 14-month lows and witnesses some intraday selling in reaction to not so optimistic remarks by Russia's Energy Minister Alexander Novak.
Novak said that Russia has not received a proposal to cut the oil production by one million barrels per day. Adding to this, a turnaround in the global risk sentiment led to some additional selling in the oil market.
This eventually undermined demand for the commodity-linked currency – loonie – and turned out to be one of the key factors behind the pair's goodish bounce, albeit the uptick lacked any strong bullish conviction.
Firming market expectations that the Fed will cut rates in March, coupled the ongoing slump in the US Treasury bond yields to fresh all-time lows weighed heavily on the US dollar and capped any further gains.
It will now be interesting to see if the pair is able to capitalize on the attempted recovery move or continues losing ground as traders now look forward to the US ISM Manufacturing PMI for some short-term impetus.
Technical levels to watch