The USDCAD pair yesterday closed on dovish note despite US dollar regaining strength in late European/early American market hours. While US macro data yesterday saw a mixed outcome it has little to no impact on US dollar’s price action. US dollar regained strength in the global market as US T.Yields saw significant recovery from multi-month lows hit on Monday. However, crude oil price for a short while in American session rose back above $60 mark and this helped Loonie bulls erase US dollar’s gains and close on dovish note yesterday. The US API weekly crude oil stockpile data released during Pacific-Asian market hours showed a sharp build in inventories well in contrast to data from last week. This caused crude oil price to decline below $60 handle.
EIA Crude Oil Inventory Data Eyed For Directional Cues
Concerns of global economic slowdown and recession in US economy influenced by macro data updates and activity in the global bond market weighed down investors risk appetite. A slowdown in economic activity is dovish for crude oil and kept the price of crude oil trading in red across the day. However, OPEC enforced production and supply cut, supply disruptions created by US sanctions on Iranian and Venezuelan crude oil and reports of Russia well on the way to meet its agreed reduction target provided strong support to crude oil bulls keeping the price of Crude oil well above $59 per barrel. Aside from Crude Oil price action, Canadian Loonie also suffers dovish influence from government bond yields. The Canadian government bond yields are also seeing curve inversion hinting at the possibility of a recession in Canada’s economy.
As bears exert strong influence from multiple fronts on Loonie, the US Greenback regained positive momentum. Aside from the recovery of US T.Yields, Loonie’s weakness in the broad market also added strength and support to USD bulls resulting in the pair seeing strong upward price action. Investors now look to macro data updates for directional cues as both calendars see some level of activity today. On the release front, Canadian calendar will see the release of trade balance data while the US calendar will see the release of trade balance data, current account data, and EIA weekly crude oil inventory data updates. While bullish Canadian data could help stall USD’s gains, for the pair to resume downside action crude oil price needs to recover while US macro data will have to see dovish outcome and influence price action of USD in the global market.
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