USD/CAD slumps to 1.3350 on oil recovery, renewed USD weakness
- USD/CAD lost more than 50 pips in early American session.
- WTI is up 1.75% on the day at near $41.50.
- Falling US Treasury bond yields weigh on the greenback.
After climbing above 1.3400 earlier in the day, the USD/CAD pair came under renewed bearish pressure during the American session and dropped to a daily low of 1.3353. As of writing, the pair was down 0.26% on a daily basis at 1.3357.
CAD capitalizes on oil rebound
A decisive recovery witnessed in crude oil prices seems to be helping the commodity-related loonie gather strength against its rivals. At the moment, the barrel of West Texas Intermediate (WTI) is up 1.75% on a daily basis at $41.47.
On the other hand, the greenback, once again, lost its strength amid plunging US Treasury bond yields. With the 10-year and the 5-year US T-bond yields losing 5.5% and 7%, respectively, the US Dollar Index is posting modest daily losses at 93.45, not allowing the pair to erase its losses.
The upbeat macroeconomic data releases, which showed a bigger-than-expected increase in Factory Orders and the ISM-NY Business Conditions Index, failed to help the USD.
Meanwhile, the data published by the IHS Markit showed that the economic activity in Canada's manufacturing sector recovered sharply in July and provided an additional boost to the CAD. The Manufacturing PMI rose from 47.8 to 52.9 and beat the market expectation of 44.1.
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.
