USD/CAD advances toward 1.3600 on USD strength, oil selloff
- USD/CAD gains traction during American session on Thursday.
- US Dollar Index advances above 96.70 on risk aversion.
- WTI slumps below $40, weighs on commodity-sensitive loonie.
The USD/CAD pair moved sideways near 1.3500 for the majority of the day before gaining traction during the early trading hours of the American session. Boosted by the broad-based USD strength, the pair shot to a fresh daily high of 1.3586 and has gone into a consolidation phase. As of writing, the pair was up 0.47% on the day at 1.3575.
USD capitalizes on risk aversion
In the absence of significant macroeconomic data releases, markets reacted to political developments in the US. The Supreme Court ruled on Thursday that Manhattan District Attorney Cy Vance Jr. is allowed to obtain US President Donald Trump's financial records in his investigation.
With the initial reaction, Wall Street's main indexes turned south and the US Dollar Index (DXY) surged higher, reflecting a risk-off market environment. As of writing, the DXY was up 0.27% on the day at 96.75.
On the other hand, crude oil prices came under strong selling pressure in the second half of the day amid a flight to safety. The barrel of West Texas Intermediate erased all of its weekly gains in a matter of hours and was last seen losing 2.83% at $39.70.
On Friday, Statistics Canada will release the jobs report for June. Previewing the data, "our bias is that the CAD will be satisfied with a solid jobs number even if it comes in below expectations," said TD Securities analysts. "We think the CAD could reflect concern if we see a substantial disappointment, perhaps below 500k."
Technical levels to watch for