After retreating from a one-week high, the USD/CAD is still in a tight range.
WTI has been consolidating its early-week decline from its October 2018 high.
Since November 2016, the DXY has gained the most in a single month.
For a new jolt of energy, US data, vivid headlines, and Fedspeak are critical.
After snapping a two-day rally the previous day, the USD/CAD is now stuck around 1.2400. Despite this, the quotation remains near the weekly high as the US dollar strengthens and oil prices rise.
During a three-day rise on Wednesday, the US dollar index (DXY), a measure of the US dollar’s value against six major currencies, rose to its highest level since April 08, not to mention the largest monthly gains in 4.5 years. While discussions about the Federal Reserve’s (Fed) monetary policy tweaks may have provided some background music to the quote, recent strong data has aided USD buyers.
The early signal for Friday’s Nonfarm Payrolls (NFP), US ADP Employment, attracted a lot of attention after surpassing the 600K expectation with 698K results for June.
The risk-off mindset bolstered the US dollar, putting a safe-haven bid beneath the currency. The escalating coronavirus (COVID-19) fears in Asia-Pacific, as well as the hawkish Fedspeak, could be linked. “I’d prefer to taper sooner than the end of the year,” Dallas Fed President Robert Kaplan recently reinforced his hawkish attitude.
On the other hand, Canada’s GDP rebounded in April, falling from -0.8 percent to -0.3 percent, as expected. The monthly growth results, however, were below the previously corrected 1.3 percent. In other news, WTI regained $74.00, up 0.10 percent intraday around $73.50 by press time, thanks to a higher-than-expected inventory drop and OPEC+ discussion ahead of today’s meeting.
In the coming weeks, Canada will not release any economic data, but the US ISM Manufacturing PMI and weekly Jobless Claims will be crucial indicators to watch ahead of Friday’s NFP. OPEC+ stories, covid developments, and Fedspeak are all additional triggers to keep an eye on.
Even a short-term decline in USD/CAD values is unlikely unless a convergence of the 10-DMA and a monthly support line, around 1.2340, is broken./n
