USD/CAD remains on a back foot around 1.3290 as WTI takes the bids

• USD/CAD weakens to sub-1.3300 area amid WTI strength.
• Canadian CPI indicated that the Bank of Canada could trigger central bank divergence.
• Canadian Wholesale Sales and the US PMI numbers decorate the economic calendar while Canadian Senators are on the move.

With the strong oil prices and BOC’s likely monetary policy divergence, the USD/CAD pair drops to 1.3290 during Thursday’s Asian session.

Following better than forecast Consumer Price Index (CPI) data from Canada, speculations were on the rounds that the Bank of Canada (BOC) will diverge from the rest of the global central banks.

However, Canadian Senators seem to have sensed the move and are on the run to a special meeting with BOC’s Governor Stephen Poloz  to discuss trade uncertainties with the US, China, India and Saudi Arabia.

Oil prices recently recovered after headlines from the US and North Korea, also concerning Iran, seem to escalate geopolitical tensions.

Looking forward, Canada’s June month Wholesale Sales and the US Markit Purchasing Managers’ Index (PMI) for August will be the key to follow ahead of the crucial Jackson Hole Symposium.

While Canadian Wholesale Sales is expected to recover from -1.8% to +0.3%, the US Markit Composite PMI is expected to decline to 51.7 from 52.6 whereas it’s the Manufacturing PMI could inflate to 50.5 from 50.4.

Technical Analysis

Only a sustained run-up beyond 1.3350 can propel prices to 1.3380 and June 18 high around 1.3430 otherwise 1.3251/50 support-zone including August 19 low and August 12 high can keep being on sellers’ radar.