The Canadian dollar today rallied against its US peer as oil prices hit new multi-month highs before giving up its gains and heading lower. The USD/CAD currency pair later recouped most of its losses as oil lost its lustre at a crucial resistance level dragging the loonie lower.
The USD/CAD currency pair today fell from an opening high of 1.3308 to a low of 1.3233 before reversing and rallying almost to its opening price by the time of writing.
The currency pair headed lower as the commodity-linked loonie rallied buoyed by rising crude oil prices as tracked by the West Texas Intermediate, which hit a high of 43.49 today. The pair’s bottom closely followed the release of the mixed Canadian International merchandise report for June. According to Statistics Canada, the country’s exported goods worth $39.71 billion in June, while importing goods worth $42.9 billion, resulting in a higher than expected trade deficit. The pair’s rally was also boosted by the greenback’s overall weakness as tracked by the US Dollar Index, which hit a low of 92.56.
The pair later recouped most of its losses as global crude oil prices fell despite the U.S. Energy Information Administration reporting that US crude oil supplies fell by 7.4 million barrels versus the expected 4.1 million barrels. The release of upbeat US ISM Non-manufacturing PMI for July also fueled the pair’s recovery.
The currency pair’s future performance is likely to be affected by crude oil prices and US dollar dynamics.
The USD/CAD currency pair was trading at 1.3278 as of 19:20 GMT, having recovered from a low of 1.3233. The CAD/JPY currency pair was trading at 79.52, having fallen from a high of 79.86.
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