Today in the European trading session, the USD/CAD currency pair flashed red and hit the intra-day low to 1.3575 level due to the risk-on market sentiment, which undermined the broad-based U.S. dollar and sent the currency pair lower. The reason for the losses in the pair could also be attributed to the upticks in the crude oil prices that underpinned the commodity-linked currency the Loonie and contributed to the currency pair declines.
Despite the continued rise in the number of coronavirus cases globally and the on-going Sino-American conflict, the market traders cheered the optimism concerning the success of the vaccine confirmed by the upbeat signals from Moderna and U.S. President Donald Trump’s comments on the COVID-19 vaccine. It should be noted that Moderna’s potential vaccine to stop Covid-19, which was first reported as safe, back in mid-May, offered hope about the vaccine’s success. CNBC reported that the vaccine produces neutralizing antibodies in all 45 patients in its early stage human trial. Meanwhile, President Trump also said that the vaccine would be available for use in record-breaking time. This positive new offered the latest strength to the risk-tone.
As in result, the market’s risk-tone sentiment remained mildly positive, with the U.S. stock futures up nearly 1.0%. Additionally, U.S. 10-year Treasury yields added 1.6 basis points to extend the previous day’s recovery moves past-0.63%.
At the coronavirus front, the COVID-19 situation continued to worsen globally. As in result, California Governor Gavin Newsom has recently ordered the re-imposition of social-distancing measures across the largest U.S. state. Whereas, the most populous state’s two largest school districts, Los Angeles and San Diego, also decided to teach only online when classes resume in August. Apart from the U.S., the Japanese Economy Minister Yasutoshi Nishimura said that his government could declare an emergency if infections grew further. However, the ever-increasing coronavirus fears initially challenged the risk-on market sentiment.
Apart from virus worries, the Sino-American tension was heated as the U.S. rolled out sanctions on diplomats from Beijing while also defied Hong Kong’s special treatment. The Republican leader recently criticized China for Hong Kong security law and held it responsible for the pandemic (COVID-19) during his on-going Rose Garden press conference. In the meantime, Trump said he had convinced many countries not to use Huawei, and he also added that “We can impose further massive tariffs on China if we desire.”
Despite this, the broad-based U.S. dollar reported losses on the day, possibly due to the upbeat trading sentiment backed by multiple factors. Although, the losses in the U.S. dollar supported the currency pair gains. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped by 0.11% to 96.073 by 9:50 PM ET (2:50 AM GMT).
At the crude oil front, WTI crude oil prices took bids around $41 on the day backed by the sharp drop in U.S. crude inventories, which helped investors to improve their confidence about oil demand. However, the data indicated an improvement in demand despite the increased number of appearing coronavirus cases worldwide. Although the upticks in the crude oil prices underpinned the commodity-linked currency, the Loonie and exerted some downside pressure on the currency pair.
Looking forward, the market traders await the U.S. economic docket, which will show the release of the Empire State Manufacturing Index and Industrial Production. The market traders will keep their eyes on the USD price dynamics and coronavirus headlines, which could play a key role in influencing the intraday momentum. Whereas, the updates concerning China-US Relations could not lose their importance.
The USD/CAD is consolidating with a selling bias at the 1.3590 mark, testing a support mark of 1.3590. It recently has formed on a bearish engulfing bar, which implies that there are yet chances of a continuation of the bearish trend, and if that happens, the pair could drop to the 1.3550 level. Below this, the next support level is expected to go after the 1.3490 level. Let’s look for selling trades below the 1.3620 level today.
Entry Price – Sell 1.35763
Stop Loss – 1.36163
Take Profit – 1.35363
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$400/ +$400
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