- USD / CAD edged down on the first day of a new week amid a sustained sell bias in USD.
- The prevailing good mood in the market continued to put pressure on the safe haven USD.
- Weak oil prices did little to undermine the loonie or extend support to the principal.
USD / CAD fell slightly at the start of the European session and fell to new daily lows, around 1.2825-30 in the last hour.
The pair witnessed further selling on the first day of a new trading week and has now reversed much of Friday’s intraday rebound of around 65 pips to the 1.2815 region. The decline marked the second day of a negative move in the previous three and was supported through widespread selling around the US dollar.
News that US President Donald Trump has signed a $ 2.3 trillion COVID-19 relief and government funding bill has added to optimism over a last-minute Brexit trade deal . This, in turn, boosted investor confidence, which weighed on the greenback’s safe haven status and was seen as a key factor putting pressure on the USD / CAD pair.
Meanwhile, USD bulls largely shrugged off the shoulders and seemed unimpressed by a good rally in US Treasury bond yields. Even a softer tone around crude oil prices, which tend to undermine demand for the commodity-linked currency – the loonie – also didn’t help support the USD / CAD pair or dampen the intraday decline. .
That said, thinning trading conditions during the holidays could prevent investors from placing aggressive bets and should help limit the USD / CAD pair’s decline. It is therefore prudent to wait for sustained weakness below the 1.2800 mark before positioning for any further depreciation in the absence of relevant economic releases in the market.