- USD/CAD fell to its lowest level since late February on Wednesday.
- Canada posted a larger-than-expected trade deficit in June.
- WTI went into a consolidation phase after climbing above $43.
The broad-based USD weakness and rising crude oil prices caused the USD/CAD pair to slump to its lowest level since late February at 1.3230 on Wednesday. However, the pair staged a technical correction in the American session and erased a large part of its daily losses. As of writing, USD/CAD was down 0.28% on the day at 1.3280.
WTI pullback keeps CAD bulls in check
The risk-on market environment provided a boost to crude oil on Wednesday and the barrel of West Texas Intermediate (WTI) jumped to a fresh five-month high $43.50. Furthermore, the weekly data published by the US Energy Information Administration (EIA) showed that crude oil stocks in the US declined by 7.3 million barrels last week and provided an additional boost to the WTI.
Nevertheless, profit-taking caused the WTI to go into a consolidation phase in the last hour and made it difficult for the commodity-related loonie to preserve its strength. At the moment, the WTI is still up 2% on the day at $42.30.
Meanwhile, Statistics Canada reported on Wednesday that Canada's trade deficit widened to $3.19 billion in June, which was worse than the market expectation of $0.9 billion.
On the other hand, the data from the US showed that the private sector added only 167K jobs in July. On a positive note, the ISM Services PMI improved from 57.1 to 58.1 in July and beat analysts' estimate of 55. Although the US Dollar Index slumped to a daily low of 92.56 with the initial reaction to the data, it rebounded to 92.80 area and helped USD/CAD pull away from its lows. However, the lack of fundamental drivers behind the USD recovery suggests that the currency is making a technical correction and remains vulnerable in the near-term.
Technical levels to watch for
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