USD/CAD rebounds after dropping toward 1.2000, looks to close the day flat
- USD/CAD touched its lowest level in nearly six years on Tuesday.
- Rising crude oil prices provided a boost to CAD.
- US Dollar Index stays flat on the day below 90.00.
After spending the first half of the day moving sideways around 1.2050, the USD/CAD pair came under renewed bearish pressure and touched its lowest level since June 2015 at 1.2005. In the late American session, however, the pair managed to stage a rebound and was last seen trading flat on a daily basis at 1.2056.
CAD capitalizes on rising crude oil prices
Earlier in the day, the sharp upsurge witnessed in crude oil prices provided a boost to the commodity-sensitive loonie. The barrel of West Texas Intermediate (WTI) reached its highest level since October 2018 at $68.85 on Tuesday before losing its traction. Currently, WTI is still up 1.15% on the day at $67.70.
Meanwhile, the data from Canada showed that the real GDP expanded by 1.1% in March, compared to analysts estimate of 1%, and the Markit Manufacturing PMI edged lower to 57 in May to miss the market expectation of 57.9.
On the other hand, the ISM Manufacturing PMI in the US improved to 61.2 in May, beating analysts' estimate of 60.5. Despite the upbeat data, the greenback struggled to find demand with Wall Street's main indexes starting the day decisively higher. Nevertheless, the strong rebound in the US Treasury bond yields helped the USD gather strength and triggered a recovery in USD/CAD. At the moment, the 10-year US T-bond yield is rising 2% and the US Dollar Index looks to close the day flat around 89.80.
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.
