USD/CAD drops below 1.3250 as oil recovery gathers momentum

• WTI rises toward $53, gains around 1% on Thursday.
• US Dollar Index stays in daily range around mid-97s.
• Housing Price Index in Canada declines in June. 

After spending a large portion of the day near the 1.33 handle, the USD/CAD pair lost its traction during the American session and slumped to fresh two-day low below 1.3250. As of writing, the pair is down 0.45% on a daily basis at 1.3240.

A decisive rebound witnessed in crude oil prices in the second half of the day seems to be helping the commodity-sensitive Loonie outperform its rivals. As of writing, the barrel of West Texas Intermediate is up nearly 1% on the day at $52.85. However, the lack of fundamental developments supporting this action suggests that the recovery is technical and could lose momentum before extending.

Meanwhile, the only data from Canada today revealed that the New Housing Price Index declined by 0.1% on a monthly basis for the second straight month in June but was largely ignored by the participants.

Dollar's recovery remains shallow

On the other hand, US President Trump, via Twitter, said that the Fed's monetary policy was keeping the dollar high and making it for the US manufacturers to compete in the market. "With substantial Fed cuts (there is no inflation) and no quantitative tightening, the dollar will make it possible for our companies to win against any competition," Trump tweeted out.

The US Dollar Index, which rose to a session high of 97.74, lost its traction following these comments and was last down 0.13% on the day at 97.50, allowing the bearish pressure to remain intact.

On Friday, labour market data from Canada will be looked upon for fresh impetus. Markets expect the unemployment rate in Canada to remain steady at 5.5% in July and the see net change in employment coming in at +12.5K following June's 2.2K decline.

Technical levels to watch for