USD/CAD retreats toward 1.30 as WTI stages modest recovery ahead of API

• Canadian economy grows 0.5% in May.
• US Dollar Index looks to close the day with small gains.
• WTI recovers to $69 in the NA session.

After dropping below the 1.30 mark in the early trading hours of the NA session, the USD/CAD pair recovered to 1.3050 but failed to extend higher as the rebounded crude oil prices helped the commodity-sensitive loonie find demand. At the moment, the pair is trading at 1.3002, losing 0.27% on the day.

The data from Canada on Tuesday showed that following April’s dismal 0.1% growth, the economy expanded by 0.5% in May to surpass the market estimate of 0.4%. Statistics Canada also announced that the industrial product price index and the raw materials index both rose 0.5% in June.

On the other hand,  the monthly report published by the US Bureau of Economic Analysis revealed that the core-PCE Price Index, the Fed’s favorite measure of inflation, increased 1.9% in June to miss the experts’ estimate of. However, the ISM Chicago’s PMI figure advanced to 65.5 in July to record its best reading since January and helped the US Dollar Index sticks to its daily gains. Ahead of tomorrow’s critical FOMC announcements, the index is moving sideways near 94.50 and is looking to end the day slightly higher.

Meanwhile, the barrel of West Texas Intermediate fell to $68.50 ahead of the NA session  to erase all of its gains that it recorded on Monday and didn’t allow the loonie to take advantage of the upbeat GDP figures. However, after the EIA report showed that the  U.S. Crude oil production fell 30,000 bpd in May to 10.442 mln bpd, the WTI advanced to $69 handle to help the CAD show resilience against its rivals.

Later in the session, the API is going to publish its weekly inventory data and a larger-than-expected in crude stocks in the U.S. could put extra weight on the pair.

Technical outlook

The initial support for the pair is located at 1.2970 (100-DMA) ahead of 1.2920 (Jun. 8 low) and 1.2835 (May 30 low). On the upside, resistances could be seen at 1.3095/1.3100 (daily high/psychological level), 1.3130 (20-DMA/50-DMA) and 1.3190 (Jul. 24 high).