USD/CAD struggles to make a meaningful recovery, trades below 1.34 ahead of data
- WTI posts small gains ahead of weekly EIA data.
- US Dollar Index recovers above 97.
- Coming up: ADP employment report from the U.S. and labour productivity data from Canada.
After closing the first two days of the week in the negative territory, the USD/CAD pair extended its slide on Wednesday amid the broad-based selling pressure surrounding the greenback and dropped to its lowest level since May 22 at 1.3360. Although the pair staged a modest rebound in the last hour, it was still down 0.12% on the day at 1.3375.
Following dovish Fed commentary earlier this week, investors started to price the heightened odds of a rate cut. While speaking at an event organized by the Federal Reserve Bank of Chicago, FOMC Chairman Powell didn't use the term "patient" when talking about a possible policy reaction from Fed to concerns over the potential negative impact of the trade conflict on the economic outlook. Pressured by these comments, the US Dollar Index slumped below the 97 mark for the first time since mid-April and was last seen down 0.06% on the day at 97.07.
Furthermore, crude oil prices extend the technical recovery for the second straight day with the barrel of West Texas Intermediate posting modest gains above the $53 mark ahead of the weekly EIA data and helping the commodity-sensitive loonie preserve its strength.
Later in the day, first-quarter labour productivity data from Canada and the ADP private sector employment and Markit Services PMI reports from the U.S. will be looked upon for fresh impetus.
Technical levels to consider