USD/CAD extends slide below 1.32 amid rising oil prices, weak USD
- On Monday, WTI rose above $58 for the first time in June.
- US Dollar Index struggles to stage a meaningful recovery.
- Coming up: Chicago Fed National Activity Index and Dallas Fed Manufacturing Index.
The USD/CAD pair, which erased nearly 180 pips last week, started the new week under a modest pressure and broke below the 1.32 mark. As of writing, the pair was down 0.28% on a daily basis at 1.3185.
The lack of developments that could deescalate the situation in the Middle East continues to support crude oil prices, and the commodity-sensitive loonie, as investors price possible supply disruptions. Although the U.S. special representative Hook earlier today said that President Trump was "very willing to sit down with Iran" it was largely ignored by the market participants. At the moment, the barrel of West Texas Intermediate is trading a little below $58, adding 0.5% on the day.
On the other hand, investors don't yet seem to be willing to help the greenback recover the losses it suffered following last week's dovish Fed remarks and disappointing data releases. According to the CME Group's FedWatch Tool, markets are pricing a 67.7% chance of a 25 basis points rate cut and a 32.3% chance of a 50 basis points rate cut.
Later in the session, the Chicago Fed's National Activity Index and the Dallas Fed's Manufacturing Index will be looked upon for fresh impetus. However, ahead of FOMC Chairman Powell's speech on Tuesday, investors could opt out to remain on the sidelines, paving the way for the extension of the consolidation phase. At the moment, the DXY is down 0.07% on the day at 96.02.
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.
