The USD/CAD pair gained traction and advanced to its highest level of the year at 1.3440 on Thursday as the commodity-sensitive loonie struggled to find demand amid falling crude oil prices. With the greenback losing strength in the second half of the day, the pair retreated from highs and was last seen trading at 1.3400, adding 0.3% on a daily basis.
Today’s OPEC meeting didn’t produce the expected headlines as members failed to reach an agreement on additional output cuts for 2019. The barrel of West Texas Intermediate came within a touching distance of the critical $50 mark before rebounding modestly. At the moment, the WTI is down 3.5% on the day at $51. Talks on output cuts are expected to continue on Friday and according to Saudi Arabia’s energy minister, the baseline scenario is for a cut of one million barrels per day, however, it’s still unclear if Russia will be on board with this change.
Meanwhile, in his prepared remarks delivered at the Chartered Financial Analyst Society Breakfast Seminar in Toronto, the Bank of Canada’s Governor Stephen Poloz said that the current level of the rates was appropriate for the ‘time-being’ to reaffirm the bank’s cautious tone revealed in yesterday’s monetary policy statement. “The main risk to the outlook is trade tensions between the U.S. and other nations, says containing inflation risks would be paramount in an outright trade war,” Poloz added.
On the other hand, the disappointing ADP employment report ahead of tomorrow’s critical NFP data weighed on the greenback on Thursday to help the pair limit its losses. As of writing, the DXY was down 0.35% on the day at 96.67.
Technical levels to consider
The pair could face the first resistance at 1.3445/55 (daily high/Jun. 12, 2017 high) ahead of 1.3500 (psychological level) and 1.3550 (Jun. 2917 high). On the downside, supports are located at 1.3365 (daily low), 1.3250 (Dec. 5 low) and 1.3165 (Dec. 4 high).