The USD/CAD extended its previous session bullish bias and hit the session high around above 0.9416 level. However, the bullish sentiment around the currency pair was being supported by a modest pickup in the ongoing drop in crude oil prices, which tend to undermine demand for the commodity-linked currency – the loonie. Hence, the broad-based U.S. dollar managed to gain some positive traction on the day amid growing market worries about surging coronavirus cases in Europe and the United States, which keeps the market trading sentiment under pressure and undermined the greenback.
In addition to this, the long-lasting impasse over the next round of the U.S. fiscal stimulus measures added further burden on investors’ sentiment and benefitted the USD’s status as the global reserve currency. Across the pond, the reason for the currency pair bullish bias could also be attributed to the weaker crude oil prices, which undermined the demand for the commodity-linked currency the loonie and contributed to the currency pair gains. As of writing, the AUD/CAD currency pair is currently trading at 0.9396 and consolidating in the range between 0.9416 – 9330.
Despite the optimism over a potential treatment/vaccine for the highly infectious virus, the market risk sentiment remains depressive with Wall Street hugging the sellers and S&P 500 Futures flashing losses amid a combination of factors. Be it the worrisome headlines concerning Brexit or the tension between the US-China, not to forget the coronavirus issues, the market trading sentiment has been flashing red since the week started, which ultimately keeps the safe-haven assets supportive on the day.
At the coronavirus front, the prevalent worries over the resurgence of the coronavirus pandemic raised fears of global economic recovery, which keeps the market trading sentiment under pressure. The coronavirus COVID-19 cases continue to climb in Europe, U.K., and the U.S. As per the latest report, the U.S. has witnessed its highest ever number of new COVID-19 cases over the weekend, while France is also reporting new case records and Spain announced a state of emergency. As in result, the imposition of stricter lockdown measures to stop the second wave of COVID-19 cases, along with receding hopes for a pre-election fiscal deal also weighed on market trading sentiment.
This, in turn, the broad-based U.S. dollar succeeded to extend its early-day gains and remained well bid on the day as investors turned to the safe-haven in the wake of risk-off market sentiment. However, the gains in the greenback could be temporary due to the worries that the economic recovery in the U.S. could be stopped because of the reappearance of coronavirus cases. Besides this, the gains in the U.S. dollar were further boosted by a lack of progress toward a U.S. stimulus package, which puts traders in a cautious mood. However, the gains in the U.S. dollar kept the currency pair higher. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies rose to 93.028.
Across the pond, the crude oil prices failed to stop its last week losing streak and remained depressed around below the $38.50 mark. However, the reason for the bearish bias around the crude oil prices could be attributed to the ever-increasing COVID-19 worries, which raised fears of renewed lockdown measures and depressed hopes for a swift recovery in the fuel demand. Across the pond, the anticipation of a rise in Libyan crude supply also played its major role in undermining crude oil.
Entry Price – Sell 0.9389
Stop Loss – 0.9429
Take Profit – 0.9329
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
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