USD/CAD remains under pressure on coronavirus optimism
- The Canadian dollar extends overnight gains on continued coronavirus vaccine optimism.
- Oil price strength is likely adding to the bullish tone around the loonie.
The bid tone around the Canadian dollar (CAD) remains strong on continued optimism for coronavirus vaccines. The USD/CAD pair is currently trading in the red near 1.3067, having dropped by 0.34% on Monday.
Risk-on bodes well for CAD
Risk sentiment strengthened on Monday after the biotechnology company Moderna said its experimental COVID-19 vaccine was 94.5% effective in preventing infection. The news came a week after the US drugmaker Pfizer announced similar results of its coronavirus vaccine.
The sell-off in the safe-haven dollar gathered steam following Moderna's news, pushing USD/CAD lower. The overnight moves are being extended in Tuesday's Asian trading hours with major Asian indices like Nikkei, S&P/ASX 200 flashing green.
Apart from the risk-on, the strength in oil prices could be adding to bullish pressures around the Canadian dollar. The West Texas Intermediate (WTI) crude, a North American oil benchmark, is currently trading near $41.50, representing a 0.5% gain, having rallied by over 2% on Monday. As noted by Reuters, Canada is a major producer of commodities, including oil, and runs a current account deficit. As such, it tends to be sensitive to the global flow of trade and capital.