USD/CAD stays above 1.35 as oil selloff continues to hurt loonie
- WTI drops below $57 on Thursday after the weekly EIA report.
- BoC's Wilkins reiterates current policy stance remains appropriate.
- US Dollar Index turns flat on the day above 98.
The USD/CAD pair staged a downward correction after refreshing its 2019-high yesterday and eased below the 1.35 mark. However, with the crude oil, once again, turning south and suffering heavy losses, the commodity-sensitive loonie weakened and allowed the pair to climb above the 1.35 mark. As of writing, the pair was virtually unchanged on a daily basis at 1.3512.
The barrel of West Texas Intermediate climbed higher toward the $60 mark earlier in the day but made a sharp U-turn after the EIA in its weekly report showed a smaller than expected draw in crude oil stockpiles in the United States. As of writing, the barrel of WTI was trading at its lowest level since early March, losing 4.4% at $56.45.
Meanwhile, Carolyn Wilkins, Bank of Canada's senior deputy governor, in a recently delivered speech echoed the BoC's policy statement and said that the degree of accommodation provided by current policy interest rate was still appropriate.
On the other hand, the U.S. Bureau of Economic Analysis today said that the real GDP in the first quarter was expected to increase by 3.1% from 3.2% announced in the previous estimate. Other data from the U.S. revealed that pending home sales declines by 1.5% on a monthly basis in April and weekly jobless claims edged higher to 215K in the week ending May 24 and came in line with the market expectation. Although the US Dollar Index rose to a fresh weekly high of 98.28 in the early NA session, it retraced its daily gains and was last seen flat on the day at 98.15.
On Friday, the core Personal Consumption Expenditures Price Index, the Fed's favourite measure of inflation, will be looked upon for fresh impetus.
Technical levels to watch for