USD/CAD struggles below 1.3600, over two-week low; bears not ready to give up yet
USD/CAD struggles to register any meaningful recovery and hangs near a multi-week low.
US fiscal concerns cap the post-NFP USD rally and act as a headwind for the currency pair.
Oil prices preserve weekly gains and underpin the Loonie, contributing to capping the pair.
The USD/CAD pair oscillated in a narrow band during the Asian session on Friday and remains close to a nearly three-week low touched the previous day. Spot prices currently trade around the 1.3575 area, nearly unchanged for the day amid mixed cues.
The US Dollar (USD) struggles to capitalize on the previous day's strong move up that followed the release of a stronger-than-expected headline US Nonfarm Payrolls (NFP) report amid US fiscal concerns. US President Donald Trump’s tax-cut and spending bill cleared its final hurdle in Congress on Thursday. The legislation is estimated to add $3.4 trillion to the nation’s debt and to explode the federal deficit. This, in turn, caps the recent USD recovery from a multi-year low and acts as a headwind for the USD/CAD pair.
Meanwhile, Crude Oil prices struggle to lure buyers amid expectations that the OPEC+ will announce an increase of 411,000 barrels per day in production for August. The black liquid, however, manages to preserve weekly gains and underpins the commodity-linked Loonie, contributing to capping the USD/CAD pair. That said, persistent trade-related uncertainties might hold back traders from placing aggressive directional bets heading into the weekend, and relatively thin trading volumes on the back of the US Independence Day holiday.
From a technical perspective, the formation of a descending channel points to a well-established short-term downtrend. This, along with negative oscillators, suggests that the path of least resistance for the USD/CAD pair is to the downside. Bearish traders, however, might wait for a sustained break below the trend-channel support before placing fresh bets and positioning for an extension of the fall witnessed over the past two weeks or so.
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