USD/CAD drops under 1.2930 amid a weaker dollar
- US dollar under pressure amid risk appetite.
- Crude oil prices correct on Tuesday, after rising sharply on Monday.
- USD/CAD reaffirms bearish bias after a brief rebound.
The USD/CAD is falling for the third consecutive day. After a brief rebound from the 1.2900 area toward 1.3000, the pair resumed the decline and it is hovering below 1.2930.
During the American session, USD/CAD trades at 1.2922 (fresh daily low) as it continues to move toward the 1.2900 zone, a critical area. The move lower is being driven by a weaker US dollar and risk appetite.
The DXY is seen at the lowest level in two weeks at 106.50, down 0.80%. It is falling for the third time, moving further away from multi-year highs. US yields show no clear direction on Tuesday. The US 10-year yield stands at 2.98% and the 30-year at 3.14%. Stocks in Wall Street are up 1% on average. Crude oil prices are falling around 1%, after a sharp rally on Monday. API inventory data is due later on Tuesday.
The combination of a weaker dollar and risk appetite weighs on USD/CAD. Other currencies, like the Australian dollar and the New Zealand dollar, are posting larger gains versus the greenback.
Economic data released on Tuesday showed Housing Starts dropped to 1.559K in June and Building Permits declined to 1.685K. In Canada, the key report of the week is the June CPI due on Wednesday. Market consensus is for an increase in the index of 0.9% (monthly) and for the annual rate to rise from 7.7% to 8.4%. “A slight disappointment on CPI adds to our belief that CAD outperformance is living on borrowed time”, warn analysts at TD Securities.
Technical levels