USD/CAD makes sharp U-turn after testing 1.33
- Retail sales in Canada rose less than expected in July.
- WTI erases losses after US announces new sanctions on Iran.
- US Dollar Index clings to daily gains above 98.50.
The USD/CAD advanced to a fresh daily high of 1.3300 in the last hour but reversed its course and quickly erased a large portion of its daily gains. However, the lack of fundamental drivers behind that drop suggests that profit-taking into London-fix might have caused this move. As of writing, the pair was up 0.1% on the day at 1.3275.
Earlier today, the data published by Statistics Canada revealed that retail sales in July rose 0.4% but fell short of the market expectation of 0.6% to put the Loonie under pressure.
Meanwhile, US President Donald Trump today announced that they have sanctioned the Iranian National Bank and allowed crude oil to recover its daily losses by reviving concerns over heightened tensions in the Middle East. The barrel of West Texas Intermediate (WTI) is now trading flat at $58,60 and helping the commodity-related Loonie limit its losses against the USD.
USD gathers strength on Friday
On the other hand, the US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, staged a decisive rebound and erased Thursday's losses. Although there were no macroeconomic data releases from the US, hawkish commentary from Federal Reserve officials and the dismal performance of major European currencies seem to be fueling the DXY's rally, which was last up 0.18% on the day at 98.54.
Boston Fed President Rosengren today argued that the US economy didn't need any additional stimulus at the moment. Additionally, Fed Vice-Chair Clarida noted that this week's rate cut was an insurance against the downside risks to the outlook.
Technical levels to watch for