USD/CAD retreats modestly after rising to weekly high above 1.2200
|- USD/CAD remains on track to close second straight day in the positive territory.
- BoC Governor Macklem said further CAD strength could impact policy settings.
- US Dollar Index clings to small daily gains at 90.80.
The USD/CAD pair stayed relatively quiet above 1.2100 for the majority of the day but turned north in the early American session. The pair, which touched a fresh weekly high of 1.2202, was up 0.37% on the day at 1.2176 at the time of press.
Dovish BoC commentary hurts CAD
Bank of Canada Governor Tiff Macklem noted on Thursday that their projections and policy setting could be materially impacted if the CAD continued to rise. "If the Canadian dollar continues to rise, there could be more of a headwind to export projections, we are looking at this," Macklem added and forced the loonie to else strength against its rivals.
Additionally, the 3% decline witnessed in the barrel of West Texas Intermediate (WTI) is putting additional weight on the commodity-sensitive CAD's shoulders.
On the other hand, following a modest decline, the US Dollar Index staged a rebound and stays in the positive territory near 90.80. Earlier in the day, the data published by the US Bureau of Labor Statistics showed that the Producer Price Index (PPI) rose to 6.2% on a yearly basis in April from 4.2%. Additionally, the weekly Initial Jobless Claims declined to 473,000 and came in better than the market expectation of 490,000. Nevertheless, the market reaction to these figures was largely muted.
On Friday, Manufacturing Sales and Wholesale Sales data will be featured in the Canadian economic docket. April Retail Sales and Industrial Production numbers from the US will be looked upon for fresh impetus as well.
Technical levels to watch for
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