USD/CAD drops to weekly lows, comes within touching distance of 1.34
- Canadian economy contracts in April.
- US Dollar Index looks to close third straight day in the negative territory.
- West Texas Intermediate clings to daily gains near $64.
The USD/CAD pair rose to a session high of 1.3468 with the loonie coming under strong selling pressure after the data published by Statistics Canada showed that the Canadian economy contracted by 0.1% in February. However, the pair lost its bullish momentum in the last hour following some optimistic comments from Bank of Canada Governor Poloz and was last seen trading at 1.3416, losing 0.31% on a daily basis.
While testifying before the House of Commons Standing Committee on Finance, Governor Poloz said that they had good reason to believe that the economy would accelerate in the second half of this year. Regarding the BoC's decision to trim its forecast of the neutral rate, Poloz stated that this decision was not permanent and that the forecast could be raised again 'one day.'
Additionally, escalating tensions in Venezuela after opposition leader calling for military uprising boosted oil prices today, helping the commodity-sensitive loonie gather strength against its rivals. At the moment, the barrel of West Texas Intermediate is trading near $64, adding 0.5% on the day.
On the other hand, the greenback continues to have a tough time finding demand ahead of the FOMC's policy announcements on Wednesday and allows the pair to continue to push lower. The US Dollar Index is sitting at its lowest level in a week near 97.50 with a daily loss of 0.3% despite the fact that the Conference Board in its latest Consumer Confidence Survey showed an improvement in consumer sentiment in April.
Technical levels to consider