August 5, 2020 USD / CAD Analysis

August 5, 2020 USD / CAD Analysis

• Uncertainty about the economic recovery in the USA and financial difficulties continue to affect the dollar. • A moderate recovery in oil prices supported the Canadian dollar and contributed to the ongoing decline. The USD / CAD parity dropped to its lowest level since February 26, falling below 1.3300 during the European session on Wednesday. The pair saw some follow-up sales on Wednesday in the first half of its trading and fell below the lowest support level in June near the 1.3315 region. The widespread downtrend surrounding the US dollar was seen as one of the most important factors behind the further acceleration of the decline in crude oil prices. The dollar was pessimistic amid the striking distance of the two-year lows, worrying that ever-increasing coronavirus cases could undermine the US economic recovery. This, coupled with the stalemate in the next round of US financial incentives, has weakened the already weak dollar, causing it to act negatively on the fourth day for the USD / CAD parity. Moreover, the increase in crude oil prices in addition to the broader USD weakness provided additional support to the commodity-related currency (loonie) and contributed to the continued downward record of the USD / CAD parity. Oil prices were backed by the report on Tuesday, which showed a larger-than-expected drop in US stocks in its week on July 31st.