USD/CAD climbs above 1.33 as oil struggles to extend rally
- Concerns over global economic slowdown weigh on commodities.
- IMF lowers 2019 world growth forecast on Monday.
- US Dollar Index advances toward mid-96s.
After closing the previous week modestly higher, the USD/CAD pair started the week on a strong footing and rose above the 1.33 mark as the commodity-sensitive loonie struggled to stay resilient against rival currencies amid the uninspiring price action seen in crude oil. As of writing, the pair was up 0.35% on the day at 1.3306.
The data from China today revealed that the annual expansion rate of the economy came in at its lowest level since 1990 at 6.4% to revive concerns over the potential negative impact of weak global demand on crude oil prices. Following the impressive rally witnessed in the second half of the last week, the barrel of West Texas Intermediate is having a difficult time pushing higher on Monday and was last seen trading near $54, where it was up only 15 cents on a daily basis.
Meanwhile, the greenback preserves its bullish momentum to start the week and provides an additional lift to the pair. After recording daily gains in the last four day, the US Dollar Index reached its highest level since January 4 at 96.43 today. Although there won't be any macroeconomic data releases from the U.S. due to Martin Luther King Jr. Day holiday, the USD could try to push higher if the developments in the U.K. continue to weigh on European currencies later in the day.
Technical levels to consider
With a daily close above 1.3300 (psychological level/daily high), the pair could target 1.3380 (50-DMA) and 1.3420 (Dec. 17, 2018, high). On the downside, supports are located at 1.3250 (daily low), 1.3180 (Jan. 9 low) and 1.3100 (psychological level).
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
