USD/CAD climbs to fresh 2-day tops above 1.32

• BoC’s Poloz says the trade war poses a serious threat.
• WTI retreats below $57 after weekly EIA report.
• US Dollar Index rebounds above 96.60.

The USD/CAD pair preserved its bullish momentum in the last couple of hours and rose above the 1.32 mark. As of writing, the pair was up 50 pips, or 0.37%, on the day at 1.3226.

The combination of a stronger greenback in the second half of the day and a weaker loonie provided the fuel to pair’s upsurge. After closing the fifth straight day in the negative territory on Wednesday, the US Dollar Index rebounded today boosted by a decisive upsurge seen in the Treasury bond yields. While the yield on the 10-year reference is rising 1.6% on the day, the DXY is adding 0.13% at 96.64.

On the other hand, after the weekly EIA report showed a larger than expected buildup in crude oil inventories in the U.S., the barrel of West Texas Intermediate extended its decline and eased below the $57 mark to weigh on the commodity-sensitive loonie. Additionally, Bank of Canada Governor Poloz sounded cautious in his latest remarks to force the CAD to stay under pressure. Regarding the economic outlook, Poloz said that a temporary slowdown was expected and added that the US-led trade war posed the biggest threat to the Canadian economy.

Although later in the session the Canadian ambassador to the United Stayed was noted saying that he believed the U.S. would lift metal tariffs soon, the CAD struggled to find demand.

On Friday, investors will be paying close attention to retail sales data in Canada, which showed a contraction of 0.9% in November.  

Key technical levels