- WTI erases large part of Tuesday’s gains, drops below $56.
- US Dollar Index struggles to gain traction after US yield curve inversion.
- Coming up: Import and Export Price Index from US and EIA’s crude oil stock report.
The USD/CAD pair closed the first couple of days of the week little changed near the 1.32 mark but gained traction in the last hour to touch its highest level in six days as the commodity-related Loonie struggles to find demand amid falling crude oil prices. As of writing, the pair was up 0.55% on the day at 1.3293.
Crude oil weakens on flight-to-safety
For the first time since 2007, the US 1year and the 2-year yield curves inverted, triggering a fresh flight-to-safety and revived concerns over the US economy going into a recession. The dismal market mood following this development weighed on crude oil prices with the barrel of West Texas Intermediate dropping to a daily low of $55.55. As of writing, the WTI was down 1.83% on the day at $55.65.
Later in the day, the Energy Information Administration’s weekly crude oil stock data will be looked upon for fresh impetus. Markets expect to see a decline of 2.7 million barrels in the week ending August 9.
On the other hand, the US Dollar Index stays relatively quiet despite the sharp fall witnessed in the US Treasury bond yields and is now posting small daily losses at 97.70. In the second half of the day, the Import Price Index and the Export Price Index data from the US will be released but are likely to be ignored by the participants. Crude oil prices and the risk perception could continue to impact the pair’s action.
Technical levels to watch for