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USD/CAD pulls away from multi-month highs, clings to small daily gains near 1.3400

  • WTI rebounds modestly from 13-month lows, still down more than 3%.
  • US Dollar Index fails to hold on to earlier recovery gains.
  • USD/CAD looks to register weekly gains of more than 150 pips.

The USD/CAD pair rose to its highest level since June at 1.3464 during the early trading hours of the American session on Friday but struggled to preserve its momentum and erased a large portion of its daily gains.

As of writing, the pair was up 0.15% on the day at 1.3408. Despite this recent pullback, however, the pair remains on track to close the week more than 150 pips higher boosted by plummeting crude oil prices. 

Oil selloff continues to hurt CAD

The heavy selling pressure surrounding crude oil since the start of the week made it difficult for the CAD to find demand. Amid heightened concerns over the coronavirus outbreak weighing on the global energy demand, the barrel of West Texas Intermediate erased 16% this week and touched its lowest level since December 2018 at $43.83. At the moment, the WTI is down 3.3% on the day at $44.80.

On the other hand, rising odds of a Fed rate cut in March and falling Treasury bond yields throughout the week forced the greenback to weaken against its rivals and limited the pair’s upside.

The US Dollar Index, which started the week at 99.34, looks to finish the week around 1% lower near 98.30. Earlier in the day, the data published by the US Bureau of Economic Analysis showed that the annual core PCE Price Index ticked up to 1.6% in January and Personal Income rose 0.6% on a monthly basis but the positive impact of these figures on the USD remained short-lived.

On the other hand, Statistics Canada reported that the real GDP expanded 0.3% on a quarterly basis in the fourth quarter as expected.

Technical levels to watch for

 

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