USDCAD struggles for a firm direction, stuck in a range above 1.3300 mark
- USDCAD is seen oscillating in a narrow trading band on the last day of the week.
- Bearish Crude Oil prices undermine the Loonie and offer support to the major.
- Softer US bond yields keep the USD bulls on the defensive and cap the upside.
The USDCAD pair struggles to gain any meaningful traction on Friday and oscillated in a narrow trading band, above the 1.3300 mark through the early European session.
Crude Oil prices languish near the monthly low amid concerns that a new COVID-19 outbreak in China will weaken fuel demand in the world’s largest importer. This, in turn, undermines the commodity-linked Loonie and offers some support to the USDCAD pair, though subdued US DOllar demand acts as a headwind for spot prices.
A modest downtick in the US Treasury bond yields is seen as a key factor keeping the USD bulls on the defensive. That said, expectations that the Federal Reserve (Fed) will continue to hike interest rates, although at a slower pace, helps limit the downside for the buck. This, along with the cautious mood, favours the USD bulls.
The market sentiment remains fragile amid worries about economic headwinds stemming from China’s COVID woes. Apart from this, geopolitical risks temper investors’ appetite for perceived riskier assets. This is evident from a generally weaker tone around the equity markets, which could drive some haven flows towards the greenback.
Despite the supportive fundamental backdrop, the USDCAD pair, so far, has been struggling to attract any meaningful buying. Furthermore, the overnight failure near the 1.3400 round figure warrants some caution before positioning for any meaningful upside. Traders now look to the US Existing Home Sales data for a fresh impetus.