- USD/CAD turned south after rebounding above 1.2530 earlier in the day.
- US Dollar Index clings to modest daily gains around 91.30.
- WTI recovers portion of weekly losses, trades around $61.50.
After losing more than 100 pips on Wednesday, the USD/CAD pair staged a technical correction and rose to a daily high of 1.2535 before losing its momentum. As of writing, the pair was down 0.1% on a daily basis at 1.2483.
The Bank of Canada’s (BoC) hawkish policy outlook provided a boost to the loonie on Wednesday and triggered a sharp drop in USD/CAD. In addition to a reduction of bond purchases, the BoC noted that current projections pointed to a rate hike in the second half of 2022. Furthermore, the bank revised its GDP growth forecasts higher for 2021, 2022 and 2023.
Crude oil recovery supports CAD
On Thursday, the greenback gained traction with Wall Street’s main indexes starting the day in the negative territory. The US Dollar Index (DXY), which tested 91.00 earlier in the day, climbed to 91.38 in the early American session. Currently, the DXY is up 0.2% at 91.30.
Despite the renewed USD strength, USD/CAD reversed its direction as rising crude oil price provided a boost to the commodity-sensitive CAD. At the moment, the barrel of West Texas Intermediate is up nearly 1% on the day at $61.58 and looks to snap a two-day losing streak.
There won’t be any macroeconomic data releases from Canada on Friday. Investors will keep a close eye on New Home Sales and preliminary Markit Manufacturing and Services PMI figures from the US.
Technical levels to watch for