USD/CAD inter-markets: the ongoing slump in sync with intrinsic

Maintaining its high degree of correlation, the Canadian Dollar continues to benefit from a prolonged up-move in WTI crude oil to fresh 6-week highs. The USD/CAD pair extended its slide for ninth consecutive day and has now seems to have decisively broken below 1.2800 handle to currently trade at a fresh 8-week low. 

Thursday's rally in crude oil was supported by yesterday's EIA report that showed an unexpected drop in US crude oil inventories. Adding to this, hopes of a fresh agreement on output freeze at the informal OPEC meeting next month is also contributing to the buoyant sentiment surrounding crude oil prices. Moreover, a broadly weaker greenback provided an additional boost to dollar-denominated commodities - like oil. 

Wednesday's release of the minutes from the Fed's July monetary policy meeting sounded less hawkish than what markets were positioned for, especially after New York Fed president William Dudley's comments on Tuesday that the central bank was moving closer to raise interest rates further, as soon as in September. The minutes dampened expectations of an eventual Fed rate-hike action in 2016, which got reflected by a steep fall in the US 10-years Treasury bond yields. 

However, the CME group's Fed fund futures are pricing in around 43% chances of a December rate-hike and hence, focus turns to Fed chair Janet Yellen's speech at Jackson Hole symposium on August 26.