USD/CAD jumps to 5-day highs above 1.3070 on crude oil selloff
- Headlines surrounding US-Iran conflict weigh on crude oil.
- WTI erases more than 3% on the day, trades below $58.
- US Dollar Index climbs higher toward mid-97s on Tuesday.
The USD/CAD pair gained traction in the last hour and posted strong gains as the falling crude oil prices weighed on the commodity-sensitive loonie. As of writing, the pair was trading at 1.3080, adding 0.25% on a daily basis.
According to several news outlets, U.S. President Donald Trump on Tuesday said that progress has been made with Iran and added that he was not looking for a regime change, reviving hopes of the conflict in the Middle East coming to an end. Pressured by this development, the barrel of West Texas Intermediate suffered heavy losses and was last seen trading at $57.30, losing 3.35% on a daily basis.
On the other hand, supported by today's data from the United States, which showed that retail sales in June increased by more than expected, the US Dollar Index extended its recovery and is now looking to close the day near mid-97s with a daily gain of 0.5%.
Commenting on the data, “Headline sales rose a more modest 0.4% (consensus 0.2%), but even this is a firm figure that suggests the market is too aggressive in terms of pricing for interest rate cuts,” James Knightley, chief international economist at ING, said.
On Wednesday, markets will be paying close attention to the inflation data from Canada, which is expected to show the core Consumer Price Index in June rising to 2.6% from 2.1% in May.
Technical levels to watch for