USD/CAD struggles for direction, stuck in a range above mid-1.2500s
- USD/CAD witnessed a subdued/range-bound price action on the last day of the week.
- A modest pullback in oil prices undermined the loonie and helped limit the downside.
- Rallying US bond yields did little to impress the USD bulls or provide any impetus.
The USD/CAD pair extended its sideways consolidative price action and remained confined in a range above mid-1.2500s heading into the North American session.
The pair struggled to gain any meaningful traction, or register any meaningful recovery from one-week lows touched in the previous session, though a combination of factors helped limit the downside. A modest pullback in oil prices undermined the commodity-linked loonie. This, along with a modest US dollar strength, acted as a tailwind for the USD/CAD pair.
The greenback held on to its modest intraday gains amid a strong pickup in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond climbed back closer to the 1.30% threshold. That said, the risk-on impulse held bullish traders from placing aggressive bets around the safe-haven greenback and capped gains for the USD/CAD pair.
On the economic data front, the headline Canadian Retail Sales came in to show a fall of 2.1% in May as against market expectations for a 3% decline. This, in turn, extended some support to the domestic currency and further contributed to keeping a lid on any meaningful upside for the USD/CAD pair. Market participants now look forward to the flash US PMI prints for a fresh impetus.
Apart from this, the US bond yields and the broader market risk sentiment will influence the greenback. Traders might further take cues from oil price dynamics to grab some short-term opportunities around the USD/CAD pair.
Technical levels to watch