USD/CAD drops below 1.2050 as USD struggles to find demand
- USD/CAD turns south after rising toward 1.2100 earlier in the day.
- US Dollar Index stays in the negative territory on Friday.
- Focus shifts to US Markit Manufacturing and Services PMI data.
After closing in the negative territory on Thursday, the USD/CAD pair staged a rebound but lost its traction before reaching 1.2100. As of writing, the pair was losing 0.12% on the day at 1.2043.
DXY remains depressed below 90.00
The unabated USD weakness is forcing USD/CAD to push lower on Friday. The US Dollar Index (DXY) is currently posting small losses at 89.74 as the upbeat market mood makes it difficult for the greenback to find demand. Later in the day, the IHS Markit will release the preliminary Manufacturing and Services PMI data for May.
Meanwhile, the S&P 500 Futures and the Nasdaq Futures are rising 0.3% and 0.2%, respectively, suggesting that risk flows are likely to continue to dominate the financial markets in the second half of the day.
On the other hand, the barrel of West Texas Intermediate is rising 1.7% on the day at $62.85, helping the commodity-sensitive loonie preserve its strength. Later in the session, Baker Hughes Energy Services' weekly US Oli Rig Count data will be looked upon for fresh impetus.
There won't be data releases featured in the Canadian economic docket on Friday and the USD's market valuation is likely to continue to drive USD/CAD movements.
Technical levels to watch for
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.
