On Monday, the U.S. dollar/Canadian dollar rose about 40 to 50 points from the day’s lows, peaking above the 1.4100 mark.
But the pair failed to capitalise on the positive move, falling about 100 points from the day’s high of 1.41513. As of press time, U.S. dollar/Canadian dollar was at 1.40833.
A rally in oil prices of about 5 per cent gave a modest boost to the commodity-linked currency, the Canadian dollar, which has proved a key factor in keeping the currency under pressure.
However, because of the economic blockade, continued fears of a global supply glut and falling demand have limited any further gains in oil, as well as further declines in the currency pair.
This comes against a backdrop of reduced risk sentiment, which continues to provide some support for the dollar’s safe-haven status and has attracted some buying at 1.4000.
Global risk sentiment has worsened amid fears of serious economic consequences from the outbreak, with US President Donald trump threatening to impose new tariffs on China in retaliation for its early misconduct in covering up and handling the outbreak. The dollar rose after U.S. Treasury secretary Steve mnuchin commented that the trump administration was prepared to support additional novel coronavirus stimulus funds if necessary.
A combination of support factors helped the pair gain support from last week’s strong rally from a six-week low around 1.3800 and continue its third straight day of gains on Monday. The focus now is on whether the pair can build on a strong rebound from six-week lows in an economy devoid of market action.