USD/CAD advances to fresh monthly high above 1.3250 as USD continues to gather strength

• USD/CAD rose to its highest level since mid-August on Monday.
• Broad-based USD strength is helping USD/CAD push higher.
• Falling crude oil prices put additional weight on the loonie.

The USD/CAD pair struggled to make a decisive move in either direction last week but turned north on Monday and touched its highest level in more than a month at 1.3266. As of writing, the pair was up 0.42% on a daily basis at 1.3260.

DXY climbs toward 93.50

The broad-based USD strength seems to be fueling USD/CAD’s rally on Monday. The US Dollar Index (DXY), which posted modest losses last week, was last seen gaining 0.5% on the day at 93.46. In the absence of significant macroeconomic data releases, the risk-averse market environment seems to be helping the safe-haven greenback outperform its rivals.

Later in the session, FOMC Chairman Jerome Powell’s speech will be looked upon for fresh impetus. Meanwhile, the only data from the US showed that the Federal Reserve Bank of Chicago’s National Activity Index dropped to 0.79 in August and fell short of the market expectation of 1.95. 

On the other hand, the dismal market mood also weighs on crude oil prices and hurt the commodity-sensitive loonie with the barrel of West Texas Intermediate (WTI) erasing 1.5% on the day at $40.25.

Meanwhile, Statistics Canada reported on Monday that the New Housing Price Index in August increased by 0.5% on a monthly basis but was largely ignored by the market paritcipants.

Technical levels to watch for