USD/CAD returns to 1.3050 area as DXY erases daily gains
|- US Dollar Index turns flat near 97.40 in American session.
- WTI rebounds to $58.50 ahead of weekly API report.
- Annual core inflation stayed unchanged at 2.3% in December in US.
The USD/CAD erased the gains it posted during the first half of the day as the recovering crude oil prices and a broadly weaker USD weighed on it. As of writing, the pair was virtually unchanged on a daily basis at 1.3055.
Crude oil's recovery gained traction during the American trading hours after Russian news agency TASS reported that the OPEC+ could postpone the March meeting to June and extend the output cut until then. The barrel of West Texas Intermediate (WTI), which closed the last seven trading days with losses, is up 0.7% on the day near $58.50 to help the commodity-related CAD find demand.
US Dollar Index reverses course
On the other hand, the US Dollar Index reversed its direction after failing to break above the 97.50 mark and turned flat on the day near 97.40. A more-than-1% drop seen in the 10-year US Treasury bond yield seems to be hurting the greenback.
Earlier in the day, the data published by the US Bureau of Labor Statistics showed that the core Consumer Price Index (CPI) remained steady at 2.3% on a yearly basis in December as expected while falling to 0.1% on a monthly basis.
Commenting on the data, "while the trend in core is almost certainly not as weak as 0.1% per month, there is certainly no sign of much upward momentum," said TD Securities analysts. "Core PCE inflation continues to run below core CPI inflation. As of November, the core PCE index was up 1.6% y/y—versus 2.3% for the core CPI."
Technical levels to watch for
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