USD/CAD loses nearly 200-pips on Friday to turn flat on the week
- Oil rally strengthens the loonie on Friday.
- DXY fails to hold above 93 amid political turmoil in the U.S.
- USD/CAD erases all of its weekly gains in a single day.
The USD/CAD pair recorded its biggest daily drop of 2017 on Friday as it lost around 200-pips in the last 24 hours. After touching its daily low at 1.2690 in the US afternoon, the pair went into a consolidation phase and was last seen trading at 1.2705, where it was down 190 pips, or 1.5%, on the day.
Oil rally and USD weakness drag the pair lower
The pair started the last day of the week under pressure as OPEC's decision to extend the oil output cut for nine more months until the end of 2018 boosted crude oil prices, which allowed the commodity-sensitive loonie to gain value against its rivals. The barrel of West Texas Intermediate approached its 2-year high near the $59 mark in the early NA session. However, after today's data from the U.S. showed that drillers added to more oil rigs in the last week, the barrel of WTI erased some of its losses and helped the pair limit its losses.
In the meantime, the data from Canada provided an additional boost to the CAD as they revealed that the GDP grew 0.2% on a monthly basis in September, beating the market expectation of 0.1%, and the unemployment rate eased to 5.9% from 6.3% in November, again coming in better than the experts' estimates.
On the other hand, the US Dollar Index, which was able to advance above the 93 mark in the early NA session, fell to a five-day low at 92.56 after reports of Michael Flynn, Trump's ex-national security adviser, preparing to testify against the president in the Russigate probe. Following the initial negative reaction to the news, the index retraced some of its losses and is now at 92.90, still down 0.06% on the day.
Technical levels to watch
The pair faces the immediate support at 1.2690 (daily low/50-DMA) ahead of 1.2550 (100-DMA) and 1.2500 (psychological level). On the upside, resistances align at 1.2750 (20-DMA), 1.2835 (Nov. 21 high) and 1.2910 (Nov. 30 high). On the daily graph, the RSI indicator fell back toward the 50 handle with today's sharp fall, suggesting that buyers lost the control of the price action.