USD/CAD drops to 12-week lows, closes in on 1.3600

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  • USD/CAD came under renewed bearish pressure in American session.
  • Markit Manufacturing PMI for Canada recovered in May. 
  • US Dollar Index slumped below 98 on Monday.

The USD/CAD pair fluctuated in a relatively tight range near 1.3700 before falling sharply during the American trading hours. As of writing, the pair was trading at its lowest level since March 9th at 1.3615, losing 1.11% on a daily basis.

DXY falls for the fifth straight day

The broad selling pressure surrounding the greenback seems to be causing the pair to extends its slide on Monday. Despite ongoing protests and riots in the US, Wall Street’s main indexes are posting modest gains to make it difficult for the greenback to attract investors as a safe-haven. At the moment, the US Dollar Index (DXY), which closed the last four days with losses, is down 0.4% on the day at 97.90.

On the other hand, the Markit Manufacturing PMI in Canada rose to 40.6 in May from 33 in April to help the loonie gather strength. Moreover, Canada’s Prime Minister Justin Trudeau announced on Monday that they will deliver C$2.2 billion in planned infrastructure funding for municipalities in lump-sum payment in June to provide an additional boost to the currency.

Meanwhile, the ISM Manufacturing PMI in the US edged higher to 43.1 in May from 41.5 in April but fell slightly short of the market expectation of 43.6. Nevertheless, this reading had little to no impact on the USD’s market valuation.

There won’t be any macroeconomic data releases from Canada on Tuesday. The only data featured in the US economic docket will be the ISM-NY Business Conditions Index. On Wednesday, the Bank of Canada (BoC) will announce its interest rate decision. 

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