USD/CAD rebounds above 1.2660 after testing 1.2600 earlier in the day
- USD/CAD is posting small daily gains above 1.2660.
- US Dollar Index erased majority of daily losses in American session.
- WTI edges lower toward $70 ahead of API inventory data.
The USD/CAD pair came under strong bearish pressure in the early American session and dropped to 1.2600 area before staging a decisive rebound. As of writing, the pair was up 0.13% on a daily basis at 1.2667.
CPI-inspired USD selloff remains short-lived
Earlier in the day, the USD faced sudden selling pressure after the US Bureau of Labor Statistics announced that the Core Consumer Price Index (CPI) declined to 4% on a yearly basis in August from 4.3% in July. Furthermore, the report revealed that the annual CPI edged lower to 5.3% from 5.4% as expected.
Following a sharp decline to 92.32, however, the US Dollar Index (DXY) reversed its direction with the market mood souring after Wall Street's opening bell. Currently, the DXY is posting small daily losses at 92.53 and the S&P 500 Index is down 0.35% at 4,452.
On the other hand, the data from Canada showed that Manufacturing Sales declined by 1.5% in July, compared to analysts' estimate for a decrease of 1%. On Wednesday, August inflation figures will be featured in the Canadian economic docket.
In the meantime, the risk-averse market environment made it difficult for crude oil prices to continue to push higher. Ahead of the American Petroleum Institue's (API) Weekly Crude Oil Stock data, the barrel of West Texas Intermediate (WTI) is down 0.6% at $70.20, not allowing the commodity-related loonie to erase its losses.
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.
