USD/CAD steadily climbs to mid-1.3200s, back closer to multi-week tops set on Friday
- Sliding Oil prices undermined Loonie and helped the pair to regain traction.
- The ongoing USD corrective slide might keep a lid on any strong up-move.
- Traders eye the US ISM non-manufacturing PMI for some short-term impetus.
The USD/CAD pair quickly reversed an Asian session dip to sub-1.3200 level and has now moved back within the striking distance of six-week tops set on Friday.
The pair managed to regain some positive traction on the first day of a new trading week and was being supported by a follow-through pullback in Crude Oil prices, which tend to undermine demand for the commodity-linked currency - Loonie. Despite escalating geopolitical tensions in the Middle East, concerns that the US-China trade war may further intensify and hit the global economy raised fears about Oil demand growth.
This was evident from a vigorous market reaction on Thursday, sending Oil prices tumbling 8% - the biggest one-day drop in more than four years following the US President Donald Trump's unexpected announcement that the US will impose additional 10% tariffs on the remaining $300 billion worth of Chinese imports from September 1.
Meanwhile, renewed concerns of a full-blown trade war between the world's two largest economies overshadowed last week's hawkish Fed rate cut and triggered a fresh leg of free-fall in the US Treasury bond yields, prompting some aggressive US Dollar long-unwinding trade, which extended on Monday and might turn out to be the only factor that might keep a lid on any runaway rally for the major.
Hence, it will be prudent to wait to wait for a strong follow-through buying before positioning for any further near-term appreciating move as traders now look forward to the US economic docket - highlighting the release of ISM non-manufacturing PMI, for some impetus later during the early North-American session amid a bank holiday in Canada in observance of Civic Day.
Technical levels to watch