• USD/CAD struggled to capitalize on the previous day’s goodish bounce from weekly lows.
  • The recent bullish run-up in oil prices continued undermining the loonie and capped gains.
  • The USD found some support from an uptick in the US bond yields and helped limit losses.

The USD/CAD pair lacked any firm directional bias and seesawed between tepid gains/minor losses through the first half of the European session. The pair was last seen hovering around the 1.2300 round-figure mark, nearly unchanged for the day.

A combination of diverging factors failed to assist the USD/CAD pair to capitalize on the previous day’s goodish rebound from mid-1.2000s, or weekly lows and led to a subdued/range-bound price action on Thursday. The recent bullish run in crude oil prices underpinned the commodity-linked loonie and capped the upside for the major.

On the other hand, the US dollar struggled to gain any meaningful traction and remained on the defensive amid mixed signals on US inflation. The Fed Chair Jerome Powell said on Tuesday that inflation is rising due to pent-up demand and supply bottlenecks and that the price pressures should ease on their own.

Separately, Atlanta Fed President Raphael Bostic and Fed Governor Michelle Bowman said that the high inflation in the US would last longer than expected, though agreed that the price increase will prove temporary. That said, a modest pickup in the US Treasury bond yields acted as a tailwind for the USD and extended some support to the USD/CAD pair.

Market participants now look forward to a slew of important US macro data for some impetus later during the early North American session. The US economic docket highlights the release of the final Q1 GDP print, Durable Goods Orders, the usual Initial Weekly Jobless Claims and Goods Trade Balance figures for May.

This, along with the US bond yields and a scheduled speech by New York Fed President John Williams, will influence the USD. Apart from this, oil price dynamics might further contribute to produce some short-term trading opportunities around the USD/CAD pair.

Technical levels to watch