USD/CAD clings to gains near 1.3430 despite broad USD weakness

• BoC Governor Poloz says bank is ready to cut rates further if needed.
• US Dollar Index slumps to two-month lows below 97 on plummeting T-bond yields.
• WTI erases more than 2%, trades around $46.

The USD/CAD pair erased its gains during the American trading hours and dropped below the 1.3400 handle but didn’t have a difficult time regaining traction as falling crude oil prices and Bank of Canada Governor Poloz’s comments weighed on the CAD. As of writing, the pair was up 0.35% on a daily basis at 1.3430.

Poloz leaves the door open for additional rate cuts

Commenting on the BoC decision to cut the policy rate by 50 basis points to 1.25% on March 4th, Poloz said the Canadian economy could be seriously tested by the coronavirus outbreak and added that the bank is ready to cut rates further if needed. 

“Monetary policy can contribute by buffering effects of outbreak on consumer and business confidence,” Poloz added. “This contribution can be particularly powerful when the shock is global, and the response is coordinated.”

In the meantime, OPEC+ failed to reach an agreement on additional output cuts on Thursday and this development triggered a fresh crude oil selloff. The barrel of West Texas Intermediate was last seen trading near the $46 mark, erasing more than 2% on a daily basis.

On the other hand, the 10-year US Treasury bond yield slumped to a fresh all-time low by losing, once again, nearly 15% on a daily basis and caused the greenback to weaken against its rivals. With the US Dollar Index dropping to its lowest level in two months at 96.75, the pair seems to be struggling to push higher in the session. 

Friday’s economic calendar will feature labour market data from both the US and Canada.

Technical levels to watch for