Home Daily Commentaries CAD rallies slightly amid surging in oil prices

CAD rallies slightly amid surging in oil prices

Daily Currency Update

The USD/CAD pair’s forecast leaned slightly bearish as the Loonie strengthened on a rally in oil prices. West Texas Intermediate (WTI) crude oil has been trending upwards by around 1.15% in the past 5 days to site near the 82.90 mark today. At the same time, the CAD gained support from a weaker USD after Federal Reserve Chair Jerome Powell made nonaggressive remarks regarding inflation. Powell noted that the Fed needs to gain more confidence before reducing the policy rate.

Key Movers

The US Dollar Index (DXY) fell by around 0.17% in the past 24 hours to the 105.491 level following the release of ADP Employment and Purchasing Manager’s Index (PMI) data. The US ADP Employment report, which measures the current month's total private employment change as well as weekly job data from the previous month, showed labour growth in the private sector surprisingly slowed in June. According to the report, private employers hired 150,000 jobseekers, which missed the expectation of 160,000 and the prior release of 157,000. Similarly, the ISM Services PMI report, which measures the performance of non-manufacturing companies, showed activity in the service sector contracted significantly. Services PMI declined to 48.8 from expectations of 52.5 and the prior release of 52.8. Any figure below the 50.0 threshold depicts a contraction in an industry.

In the Eurozone, the EUR/USD pair advanced throughout the first half of the day, as demand for the USD fell Powell’s comments on Tuesday.

The GBP extended its strength in today’s London session after a sharp recovery from the three-day low of 1.2615 yesterday. The GBP/USD pair exhibited strength so far today as the near-term outlook of the USD became uncertain.

The Japanese Yen (JPY) lost ground against the USD this morning. The USD/JPY pair reached a new high of 161.91, a level not seen since 1986. This upside could be attributed to data indicating that Japan's business activity turned contractionary in June.

Expected Ranges

  • EUR/CAD: 1.46914 - 1.47353 ▲
  • GBP/CAD: 1.73438 - 1.74113 ▲
  • AUD/CAD: 0.911620 - 0.916980 ▲
  • USD/CAD: 1.36175 - 1.36867 ▼