- CAD on the retreat as crude oil weakens, Greenback on the rebound.
- BoC set for a rate hike in July, though the central bank could pull the plug if data softens.
The USD/CAD is trading higher for Monday, lifting into 1.3170 as the US Dollar rebounds across the broader market. Friday's Dollar sell-off looks to have ended, and the Greenback is on the rise, while at the same time the CAD is on the decline, getting pushed lower as crude oil prices face bearish headwinds after the weekend saw a resurgence of fears that Saudi Arabia would again begin pushing for production limit increases.
Over the weekend, US President Trump tweeted that he and King Salman of Saudi Arabia agreed that oil production needs to rise in order to combat lifting prices, which saw new multi-year highs last week, though Saudi Arabia has stopped short of actually confirming they would increase their production capacity, keeping a floor under oil prices, which knocked sharply lower at the outset of the new trading week following the news. The White House eventually had to walk back the POTUS' tweet statement, saying that Saudi Arabia is capable of increasing their daily output by 2 million bpd should it be required to stabilize prices.
The Bank of Canada (BoC) is expected to hike interest rates by 25 basis points this month, though the BoC is keeping a close eye on economic data coming out of Canada, and a downturn in figures released for the CAD could still see the BoC fall back on a rate hike.
USD/CAD levels to watch
As noted by FXStreet's own Eren Sengezer, "on the downside, ahead of the critical 1.3000 (psychological level/50-DMA), the pair could encounter an interim support at 1.3130 (Jun. 29 low). 1.2915 (100-DMA) could be the next target below 1.30. On the upside, resistances could be seen at 1.3170 (20-DMA), 1.3200 (psychological level) and 1.3270 (Jun. 29 high)."
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