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USD/CAD extends slide below 1.4050 ahead of FOMC Chairman Powell’s speech

  • USD/CAD loses its bullish momentum before testing 1.4100.
  • WTI clings to gains near $26 ahead of API, helping CAD gather strength.
  • US Dollar Index stays quiet below 100 as focus shifts to Powell’s speech.

The USD/CAD pair closed the first two days of the week in the positive territory as the lackluster performance of crude oil made it tough for commodity-related loonie find demand. However, the pair lost its momentum for the second straight dau before reaching 1.4100 and dropped into the negative territory. As of writing, USD/CAD was down 0.32% on a daily basis at 1.4032.

The barrel of West Texas Intermediate (WTI) posted small daily gains on Tuesday as fears over a second coronavirus wave outweighed additional output cuts. Ahead of the US Energy Information Administration’s (EIA) Weekly Petroleum Status Report, the WTI is up 1.3% on the day at $26.20, allowing the CAD to stay resilient against its rivals.

USD stays on the back foot ahead of Powell’s speech

On the other hand, the US Dollar Index is staying below 100 to reflect the modest selling pressure surrounding the greenback. 

Later in the day, the Producer Price Index will be the only data featured in the US economic docket. More importantly, FOMC Chairman Jerome Powell will deliver a speech on the state of the economy at the Peterson Institute for International Economics at 1300 GMT.

Previewing this event, “Powell is expected to categorically deny the option of setting negative interest rates and that may marginally weigh on stocks and support the dollar,” said NDDFX Yohay Elam. “However, if he surprises by refusing to rule out going below zero, the dollar will likely dive and stocks could surge.”

Technical levels to watch for

 

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