There were no positive fundamentals during Monday, but the Canadian currency made slight net gains as the US dollar registered wider losses. Nevertheless, there is scope for support close to current levels.
The latest COT data recorded a small decline in net long, non-commercial Canadian dollar positions to just below 51,500 from close to 63,000 the previous week. There will still be the risk of significant position adjustment and renewed Canadian dollar selling if gains seen on Friday are not sustained.
After surging from late in the European session on Friday, oil prices held a firm tone ahead of the US open on Monday.
Markets continued to monitor the OPEC technical meeting in Vienna for fresh evidence on compliance and whether there would be additional measures to support prices. The initial evidence suggested that there would be no further measures which had some negative impact on sentiment.
The Canadian wholesale sales data was weaker than expected with a 0.5% decline for June following a revised 1.0% gain previously. This was the first decline in nine months, although there was no significant market impact.
Oil prices came under pressure after the US open with WTO dipping to below $48.0 p/b which had some negative impact on the Canadian currency.
The potential impact was, however, offset by a generally weaker US dollar as it lost ground against all the majors.
In this environment, the Canadian dollar was able to resist losses with USD/CAD edging lower to around 1.2570.
USD/CAD 4-Hour Chart