USD/CAD struggles to find directiom amid USD and oil weakness, trades above 1.3400

• USD/CAD fails to build on Thursday’s recovery gains. 
• US Dollar Index struggles to rebound above 93.00.
• WTI trades deep in the negative territory near $40.

Despite the unabated selling pressure surrounding the USD on Thursday, the USD/CAD pair gained 80 pips to close at 1.3424 as the plunging crude oil prices hurt the commodity-related loonie. On Friday, the pair trades in a relatively tight range above 1.3400 and struggles to make a decisive move in either direction.

The data from the US showed on Thursday that the economic activity shrunk by 32.9% on a yearly basis in the second quarter. With this reading reviving concerns over a dismal energy demand outlook, the barrel of West Texas Intermediate (WTI) lost nearly 3%. Ahead of Baker Hughes’ weekly US Oil Rig Count data, the WTI is down 0.7% on the day at $40.05, keeping USD/CAD’s downside limited.

Eyes on US and Canada data

On the other hand, falling US Treasury bond yields continue to weigh on the greenback. The US Dollar Index (DXY) dropped to its lowest level since May 2018 at 92.55 on Friday but staged a rebound. Nevertheless, the DXY failed to climb above 93.00 and was last seen losing 0.15% at 92.82. Meanwhile, the 10-year US T-bond yield is down 2.8%. 

In the second half of the day, Personal Spending, Personal Income and Personal Consumption Expenditures (PCE) Price Index data will be featured in the US economic docket.

More importantly, Statistics Canada will publish its monthly Gross Domestic Product (GDP) data for May, which is expected to show a growth of 3.5%.

Technical levels to watch for