USD/CAD refreshes eight-day bottom below 1.3600 as US dollar marks broad weakness

• USD/CAD stays depressed for the third day in a row.
• Canadian PM Trudeau’s rejection of the White House invitation failed to weaken the Loonie.
• Risk-on markets, US coronavirus conditions and expectations of further stimulus cut the greenback’s safe-haven demand.
• US ISM Non-Manufacturing PMI, BOC Business Outlook Survey will be in focus.

USD/CAD stays pressured near 1.3535/40, down 0.07% during the pre-European session on Monday. The loonie pair recently dropped to the lowest since June 24 as the US dollar remains pressured amid broad risk-on sentiment as well as surge in the coronavirus (COVID-19) cases in the world’s largest economy. Also exerting downside pressure on the quote could be Canadian PM Justin Trudeau’s rejection of this week’s trilateral meeting with Mexico in America.

After initially keeping mum about the key trade talks, Canadian PM rejected the White House invitation to discuss future trade ties with the US and Mexico. The Trump administration and Mexican diplomats earlier signaled talks on the United States-Mexico-Canada Agreement (USMCA) but Ottawa kept silent and stepped back afterward. The news increases doubts on the much-championed trade deal by US President Donald Trump, which in turn plays negative for the Republican leaders’ Presidential election.

Elsewhere, the US continues to publish record high COVID-19 figures with situations in Texas and Florida getting worse day by day. The updates not only stops the economic restart plans but also cite the Trump administration’s failure to tame the pandemic. Even so, President Trump tweeted to signal the increase in testing as the reason behind the surge in the virus figures.

It should also be noted that the market’s risk-on mood adds to the USD’s weakness. The upbeat sentiment could be witnessed in the mild gains of S&P 500 Futures, US 10-year Treasury yields and the Asia-Pacific shares.

Other than the US dollar weakness, WTI’s strength also favors the Canadian dollar’s strength. The oil benchmark registers 0.5% gains while taking the bids around $40.50 by the press time.

Looking forward, risk catalysts will be closely observed before the US/Canada market open. Following that the US ISM Non-Manufacturing PMI, expected 49.5 versus 45.4 prior, will be the key. Additionally, the Bank of Canada’s (BOC) quarterly Business Outlook Survey could also direct the pair’s near-term moves.

Technical analysis

The pair’s sustained trading below 21-day SMA, also extending the last week’s break of an ascending trend line from June 10, direct USD/CAD to 200-day SMA level near 1.3500. Though, the quote’s further weakness is less likely. Meanwhile, the support-turned-resistance line, at 1.3655 now, will probe buyers past-21-day SMA level of 1.3565.