USD/CAD turns positive on the day above 1.2530 ahead of US data
- USD/CAD regained its traction after dropping to 1.2500 area.
- US Dollar Index climbs above 92.50 ahead of US data releases.
- Falling crude oil prices continue to weigh on CAD.
The USD/CAD pair closed virtually unchanged on Wednesday and edged higher during the Asian trading hours on Thursday. However, the pair lost its traction and dropped to 1.2500 area in the European session. Nevertheless, with the greenback starting to gather strength, USD/CAD managed to reverse its direction and was last seen rising 0.22% on the day at 1.2534.
CAD remains on the back foot as oil continues to push lower
Despite the broad-based USD weakness, the Bank of Canada's (BoC) cautious tone with regards to policy outlook made it difficult for the CAD to outperform its American counterpart. Moreover, falling crude oil prices put additional weight on the loonie's shoulders. The barrel of West Texas Intermediate lost more than 3% on Wednesday and was last seen trading at $71.75, down 1.55% on a daily basis.
On the other hand, the US Dollar Index turned north ahead of the American session as the negative impact of FOMC Chairman Jerome Powell's dovish remarks seems to have remained short-lived. At the moment, the US Dollar Index is rising 0.17% at 92.52.
Later in the session, the Federal Reserve Bank of New York's Empire State Manufacturing Index, the weekly Initial Jobless Claims and June Industrial Production data from the US will be looked upon for fresh impetus. FOMC Chairman Powell will respond to questions on the second day of his testimony but he is unlikely to deliver any fresh insights into the policy outlook.
The ADP Employment Change for June will be featured in the Canadian economic docket.
Technical levels to watch for