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  • USD/CAD stays directionless on Friday amid thin trading conditions.
  • USD/CAD is down more than 100 pips for the week.
  • WTI remains on track to settle above $40.

The USD/CAD pair is moving sideways below 1.3600 for the third straight day on Friday as trading conditions remain thin due to the Independence Day holiday in the US. As of writing, the pair was unchanged on the day at 1.3562. On a weekly basis, the pair is down more than 100 pips and is looking to snap its three-week winning streak.

CAD capitalizes on rallying crude oil prices

The upbeat macroeconomic data releases, especially PMI figures, from major economies such as Canada, the US, China and Germany this week eased concerns over a dismal energy demand outlook. Moreover, the sharp witnessed in the US crude oil inventories provided an additional boost to crude oil prices.

With the barrel of West Texas Intermediate (WTI) gaining more than 5% this week, the commodity-sensitive loonie preserved its strength against the greenback. 

On the other hand, the surging number of confirmed coronavirus cases in the US helped greenback find demand as a safe-haven. However, the impressive labour market data on Thursday and Wall Street’s main indexes’ strong performance limited the USD’s upside. The US Dollar Index was last seen losing 0.3% on the week at 97.20.

US: Nonfarm Payrolls (NFP) surges by 4.8 million in June, Unemployment Rate falls to 11.1%

Assessing USD/CAD’s outlook, “we expect the level of oil prices will remain key for USD/CAD sensitivity. In other words, if oil keeps pushing higher, we can expect the relationship between oil and USD/CAD to increase,” said Rabobank analysts. “While if we move substantially lower, then we expect the relationship to decrease. As it stands, the relationship has picked up a bit in light of the recent rally and we some small downside for oil prices in the short term which will weigh on CAD.”

Technical levels to watch for