- WTI breaks below $55 after EIA shows large increase in US crude oil stocks.
- US Dollar Index climbs higher toward the 98 mark.
- 10-year US T-bond yield drops to lowest level since September 2016.
The USD/CAD pair posted decisive gains in the second half of the day as falling crude oil prices made it difficult for the Loonie to stay resilient against the dollar. As of writing, the pair was trading at its highest level in a week at 1.3315, rising 0.7% on a daily basis.
WTI loses traction on global growth worries
Dismal retail sales and industrial production data from China revived concerns over a global economic slowdown earlier today. Additionally, Germany’s Destatis reported a 0.1% contraction in Germany’s economic activity in the second quarter to further weigh on the market sentiment. Meanwhile, the 10-year US Treasury bond and the 2-year US Treasury bond yield curve inverted for the first time since the start of the last financial crisis in 2007.
All these developments also forced investors to price a weak energy demand outlook and caused crude oil prices to turn south. Furthermore, the Energy Information Administration’s (EIA) weekly crude oil stock report showed a larger-than-expected increase in crude oil stocks to drag prices even lower. The barrel of West Texas Intermediate was last seen trading at $54.40, losing 4% on the day.
Meanwhile, despite falling US Treasury bond yields, the US Dollar Index is posting modest gains a little below the 98 mark on Wednesday, supporting the pair’s daily rally.
On Thursday, the ADP employment report from Canada and retail sales and industrial production data from the US will be looked upon for fresh catalysts.
Technical levels to watch for