USD/CAD renews two-week lows at 1.3917 as WTI climbs above $15
- WTI continues to push higher ahead of EIA data, trade above $15.
- US Dollar Index below 99.70 after Q1 GDP data.
- Coming up: FOMC's interest rate decision and policy statement.
The USD/CAD pair came under renewed bearish pressure in the early trading hours of the American session and fell to its lowest level in two weeks at 1.3917 before rebounding modestly. As of writing, the pair was trading at 1.3933, down 0.43% on a daily basis.
Sharp decline in US economic activity in Q1
The first estimate of the US Bureau of Economic Analysis on Wednesday showed that the real Gross Domestic Product (GDP) in the US contracted by 4.8% on a yearly basis in the first quarter amid coronavirus lockdowns. Although this reading came in worse than analysts' estimate for a decline of 4%, the market sentiment remains upbeat and helps crude oil extend its daily rally.
Gilead Sciences' report showing that the National Institute of Allergy and Infectious Diseases’ (NIAID) reached its main goal with the remdesivir trial seems to be allowing risk-on flows to dominate the markets. At the moment, the barrel of West Texas Intermediate (WTI) was trading at $15.50, gaining 16.4% on a daily basis and providing a boost to the commodity-sensitive CAD.
On the other hand, the US Dollar Index continues to edge lower with the greenback struggling to find demand ahead of the FOMC's monetary policy announcements. The dismal GDP reading could cause the FOMC to offer more stimulus.
Commenting on the US growth figures, "given the severity of the data, the Fed may opt to further stimulate the economy and print more money," said FXStreet analyst Yohay Elam. "That is good news for stocks, which benefit from an abundance of liquidity, and detrimental for the dollar. The greenback has room to fall due to its safe-haven status and to a lesser extent due to flooding markets with greenbacks."
Technical levels to watch for