USD/CAD drops below 1.2700 on strong oil rebound, USD weakness
- USD/CAD is losing more than 1% on Monday.
- WTI is posting impressive gains at the start of the week.
- US Dollar Index declines toward 93.00 after latest US data.
The bearish pressure surrounding the USD/CAD pair strengthened during the American trading hours on Monday. As of writing, the pair was down 1.1% on a daily basis at 1.2681.
CAD capitalizes on oil rally
The sharp upsurge witnessed in crude oil prices and the broad-based USD weakness is causing USD/CAD to push lower at the start of the week.
Following last week's steep decline, the barrel of West Texas Intermediate (WTI) is currently rising 6% on the day at $65.50. In the absence of significant fundamental drivers, the risk-positive market environment seems to be helping oil find demand.
On the other hand, the decisive recovery in Wall Street's main indexes is making it difficult for the safe-haven USD to stay resilient against its rivals. At the moment, the US Dollar Index is losing 0.4% at 93.08.
The data from the US showed on Monday that the economic activity both in the manufacturing and the service sectors continued to expand in August, albeit at a softer pace than they did in July. Nevertheless, these data had little to no impact on risk sentiment. Finally, the National Association of Realtors reported that Existing Home Sales increased by 2% in July.
US: Markit Manufacturing PMI retreats to 61.2 in August vs. 62.8 expected.
US: Markit Services PMI declines to 55.2 in August vs. 59.4 expected.
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.
