USD/CAD rebounds toward 1.3100 ahead of BoC’s Business Outlook Survey

• Crude oil prices retrace Monday’s losses ahead of API data.
• US Dollar Index posts small gains after falling for five straight days.
• Coming up: Retail sales data from Canada and existing home sales from the US.

The USD/CAD pair lost more than 50 pips on Monday and continued to slide on Tuesday to touch its lowest level since July 22 at 1.3068 before staging a technical correction. As of writing, the pair was trading at 1.3095, up 0.08% on a daily basis.

The US Dollar Index, which lost more than 1% last week amid the strong performance of major European currencies and heightened expectations of the Federal Reserve opting out for one more 25 basis points rate cut at the end of the month, is posting small recovery gains on Tuesday to help the pair floating in the positive territory.

What’s coming up?

Later in the day, existing home sales and retail sales data from Canada will be looked upon for fresh impetus. More importantly, the Bank of Canada (BoC) will release its closely-watched Business Outlook Survey (BOS).  

Previewing the BOS publication,  “We do not expect the report to make a strong case for 2019 rate cuts, but would note that the survey period concluded in mid-September before the most recent US/China trade talks which should limit any positive implications for investment intentions,” said TD Securities analysts.

Meanwhile, positive comments from officials hinting at a possible trade deal with the United States and China at the start of the week seem to be helping crude oil prices gain traction and allow the commodity-related Loonie to stay resilient against its rivals. Ahead of the weekly crude oil stock report of the American Petroleum Institue (API), the barrel of West Texas Intermediate is up 0.5% on the day at $53.70.

Technical levels to watch for