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  • USD/CAD returned to 1.3500 area after fluctuating wildly in early American session.
  • US Dollar Index slumped to fresh multi-month lows below 97.
  • WTI rose above $37 on hopes of OPEC+ revolving output cut compliance issues.

The USD/CAD pair stayed relatively calm near 1.3500 during the first half of the day but made sharp movements in both directions in the American session. After slumping to a daily low of 1.3466, the pair surged to 1.3540 in less than an hour but failed to preserve its momentum. As of writing, the pair was posting small daily gains at 1.3502.

USD/CAD stays resilient despite USD selloff

Earlier in the day, the USD came under strong selling pressure after the European Central Bank’s policy announcements fueled an impressive rally in the EUR/USD pair. The US Dollar Index slumped to the 97 area and allowed USD/CAD to turn south.

However, the disappointing data from Canada forced the CAD to erase its gains. Statistics Canada reported on Thursday that Canada’s trade deficit widened to $3.3 billion in April with exports declining by 29.7% to $32.7 billion, the lowest level in more than 10 years.

Nevertheless, recovering crude oil prices capped USD/CAD upside. Reports suggesting that OPEC+ has resolved output compliance issue with Nigeria, Angola and Kazakhstan provided a boost to the West Texas Intermediate (WTI). At the moment, the WTI is up 1.75% on the day at $37.40.

On Friday, labour market data from Canada and the United States will be watched closely by the market participants.

Previewing the Nonfarm Payrolls (NFP) report, “upbeat US data lately has triggered Wall Street rallies in detriment of the dollar, and there’s no reason to believe that a better-than-expected US employment report could trigger a different reaction,” said FXStreet chief analyst Valeria Bednarik. “Disappointing numbers could have the opposite effect, although to a lesser extent and hardly mean a dollar’s comeback.”

Technical levels to watch for