USD/CAD down 0.6% to 1.2746 on the day
Risk trades are faring better today, finding some comfort after the meltdown yesterday in the wake of Evergrande/China fears. US futures are pointing higher and that is helping to keep sentiment more buoyed as we get into European morning trade.
As such, commodity currencies are leading the way in the FX space with the loonie taking charge amid a rebound in oil prices alongside a “status quo” Canadian election. USD/CAD is down 0.6% but from a technical perspective, it isn’t hinting at much:
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The drop back below 1.2800 sees the upside momentum stifled somewhat but price action holds above the key hourly moving averages and that continues to indicate that the near-term bias is still favouring buyers for the time being.
The key near-term levels are seen in the region of 1.2688-14 and will be the spot to watch in case sellers are to keep with the momentum so far today. Only a drop back below that will signify any shift in sentiment for the pair this week.
Otherwise, the latest downdraft may prove to be nothing more than a brief reprieve. Of course, a lot depends on risk sentiment this week with all eyes on China.