USD/CAD retreats to 1.3550 area, recovers on oil selloff
- USD/CAD fell to 1.3550 area during the American session.
- Falling crude oil prices makes it difficult for loonie to preserve its strength.
- US Dollar Index slumps toward 97.00 after upbeat data.
The USD/CAD climbed to 1.3600 on broad-based USD strength during the first half of the day but lost its traction during the American session. After dropping to a session low of 1.3550, however, the pair staged a rebound and was last seen trading flat on the day at 1.3573.
Upbeat US data weigh on greenback
The data from the US on Wednesday showed that the business activity in the manufacturing sector expanded in June with the ISM Manufacturing PMI advancing to 52.6 from 43.1 in May. Moreover, the ADP Employment Changed arrived at +2.36 million. Although this reading came in lower than the market expectation of +3 million, May's print got revised up to +3.06 million from -2.76 million and provided a boost to market sentiment.
The USD failed to preserve its strength amid risk-on flows and the US Dollar Index (DXY) slumped toward 97.00. As of writing, the DXY was down 0.32% on the day at 97.08.
On the other hand, despite the weekly data published by the US Energy Information Administration showed that crude oil stocks decreased by 7.2 million barrels, the West Texas Intermediate (WTI) struggled to stage a rebound. With the WTI posting daily losses around mid-$39s, the commodity-sensitive CAD is having a hard time finding demand.
Later in the day, the FOMC will release the minutes of its June meeting.
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.
