USD/CAD's recovery from 1.3485 extends to 1.3600 area
- US dollar rebound from 1.3485 extends to levels past 1.3600.
- The dollar appreciates as coronavirus fears hurt market sentiment.
- USD/CAD expected to reach 1.40 in H2 – Rabobank.
US dollar’s recovery from Tuesday’s lows at 1.3485 has extended on Wednesday to levels past 1.3600, approaching one-week highs at 1.3630 area. Concerns about a second coronavirus wave, falling oil prices, and Trump’s threat to impose tariffs on European products are weighing on sentiment and buoying the safe-haven greenback.
COVID-19 fears and lower oil prices hurt the CAD
The Canadian dollar is trading lower for the second consecutive day on Wednesday. The growing number of coronavirus infections in the US, Latin America and China have boosted fears that new lockdowns might derail economic recovery which as dampened risk appetite.
Furthermore, the decline in oil prices, which have dropped beyond 3% so far today after the US Energy Information Administration reported that crude stocks increased by 1.4 million barrels last week, has increased negative pressure on the loonie.
USD/CAD expected to reach 1.40 in H2 - Rabobank
On a longer-term perspective, the FX Analysis Team at Rabobank sees the pair’s recovery extending well above 1.3600, “we expect USD/CAD has found a base and favour the pair moving back above 1.36 in the coming weeks before trading north of 1.40 in H2.”
USD/CAD key levels to watch