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US Greenback Continues to Pressurize Loonie despite Slump In Crude Oil Price

Colin First

The USD/CAD pair traded with a mild positive bias through the early European session and is currently holding with modest daily gains, just above mid-1.2900s. The pair on Wednesday rallied nearly 100-pips from an intraday low level of 1.2857 amid a slump in crude oil prices, which weighed heavily on the commodity-linked currency – Loonie. In fact, WTI crude oil fell to near 2-month lows, below $65.00/barrel mark after the latest EIA & US Crude stockpile report showed an unexpected build in the US crude oil stockpiles. With oil prices recovering some of the overnight lost ground, a modest uptick in the US Treasury bond yields assisted the pair to build on overnight sharp rebound from one-week lows. The benchmark US 10-year bond yield has now moved back closer to the 3.0% psychological level and remained supportive of the pair’s steady climb on Thursday.

USDCAD Still Higher

However strong US Greenback supported by US bond yields continue to pressurize Loonie and might now turn out to be the only factor keeping a lid on any meaningful up-move ahead of today’s release of the BOC Financial System Review and the BOC Governor Stephen Poloz’s scheduled speech. The Statistics Canada released International Merchandise Trade data that came out better-than-expected of negative 1.9B, compared to the negative 4.1B in the previous period.

USDCAD Hourly

However weaker data in Building Permits and Ivey PMI in Canadian calendar also contributes greatly to current position of Canadian Loonie as mixed data in both US and Canadian Calendar has left the pair to play tug-off war resulting in pair consolidating around mid-1.29 handle, exactly same place before the pair took a dive on Wednesday’s session. From a technical point of view A strong follow-through buying has the potential to continue lifting the pair further towards reclaiming the key 1.30 psychological mark while 1.2925 level seems to protect the immediate downside. Moving forward investors main focus in regards to Canadian dollar would be on Poloz’s speech scheduled later today and employment change data scheduled to release tomorrow. Expected support and resistance for the pair are at 1.2911 / 1.2881 /1.2841 and 1.2970 / 1.3000 / 1.3045 respectively.

This article was originally posted on FX Empire

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