USD/CAD sticks to daily gains above 1.33 despite crude oil rally

• WTI rises above $68 on Friday amid OPEC headlines.
• Dismal CPI and retail sales data from Canada hurt the loonie.
• On a weekly basis, USD/CAD gains nearly 150 pips.

After erasing yesterday’s gains and dropping to a fresh two-day low at 1.3260, the USD/CAD pair reversed its course and spiked to its highest level in more than a year at 1.3380 following the disappointing macroeconomic data releases from the United States. However, crude oil’s strong performance forced the pair to retrace a portion of its daily gains in the last hours. As of writing, the pair was trading at 1.3330, adding 0.11% on the day.

Today’s data from Canada showed that retail sales contracted by 1.2% in April to fall short of the market expectation of 0%. Furthermore, the core-CPI data released by the Bank of Canada dropped to 1.3% on a yearly basis in May from 1.5% in April.

On the other hand, following the meeting in Vienna today, OPEC announced its decision to increase output by 1 million barrels per day effective from 1 July with the intention to bring the total compliance to the current output agreement to down 100% from 146%.  

“It remains unclear what OPEC will do when the current deal expires at the end of the year. A decision on this will likely be made on 3 December. The deal today does not affect our current forecast for Brent to average USD72/bbl in H2 and USD73/bbl in 2019,” Danske Bank analysts wrote in a recently published report. Meanwhile, the barrel of West Texas Intermediate was last seen trading at $68.11, adding nearly 4% on the day.

Technical levels to consider

The pair could encounter the first technical resistance at 1.3380 (daily/yearly high) ahead of 1.3400 (psychological level) and 1.3470 (Jun. 12, 2017, high). On the downside, supports are located at 1.3300 (psychological level), 1.3260 (daily low) and  1.3200 (Jun. 19 low/psychological level).