USD/CAD surges to fresh weekly high above 1.3050
|- US Dollar Index continues to erase its daily losses on higher T-bond yields and strong data.
- WTI drops to $69 after the monthly EIA report.
- Ivey PMI in Canada disappoints.
After finding a short-term support below the 1.30 mark, the USD/CAD pair gained traction in the NA session and advanced to its highest level since July 31 at 1.3070. As of writing, the pair was trading at 1.3055, adding 50 pips, or 0.4%, on the day.
Earlier in the session, according to the IBD/TIPP, the Economic Optimism Index in the United States rose to its highest level in more than a year and a half at 58 to beat the experts' estimate of 57.2. Boosted by the upbeat data, the US Dollar Index started to pull away from the daily low that it set at 95 and allowed the USD/CAD pair to reverse its course. Furthermore, a 1% increase seen in the 10-year US T-bond yield helped the greenback stay strong against its rivals. At the moment, the index is still down 0.15% on the day at 95.23.
On the other hand, the Ivey PMI in Canada fell sharply to 56.7 in July from 65.1 in June to put pressure on the loonie. Additionally, falling crude oil prices also put some extra weight on the CAD's shoulders.
The monthly report released by the EIA showed that they revised they were expecting the crude oil production to rise by 1.02 million barrels per day in 2019 compared to the previous estimate of 1.01 million barrels per day. Later in the session, the API is going to publish its weekly inventory report and a higher-than-expected buildup in crude stocks could drag the WTI lower, which was last seen trading at $69.25.
Technical outlook
The pair could face the first technical resistance at 1.3085 (20-DMA) ahead of 1.3140 (50-DMA) and 1.3215 (Jul. 12/Jul. 11 high). On the downside, supports align at 1.3000/1.2990 (psychological level/100-DMA), 1.2920 (Jun. 8 low) and 1.2835 (May 30 low).
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