• A follow-through recovery in Oil prices underpin Loonie and exert downward pressure.
• The USD fails to capitalize on rebounding US bond yields and does little to lend support.
• Focus now shifts to Thursday’s important release of the prelim US Q1 GDP growth figures.
The USD/CAD pair remained under some selling pressure through the early European session on Thursday extended its overnight pullback from the post-BoC swing high.
The Canadian Dollar lost some ground against its US counterpart on Wednesday after the Bank of Canada (BoC), as was widely expected, left its benchmark interest rate unchanged at 1.75%. The pair rallied to an intraday high level of 1.3546 – the highest since early-Jan. but started losing momentum amid a goodish recovery in Crude Oil prices.
Having dropped to fresh two-month lows near $57.00, Oil prices witnessed an intraday turnaround on Wednesday after API report showed a larger-than-expected drop in US crude inventories. The recovery move extended through Thursday’s trading session and underpinned demand for the commodity-linked currency – Loonie.
Meanwhile, the US Dollar failed to capitalize on a solid rebound in the US Treasury bond yields and was seen consolidating recent gains to near two-year tops, which did little to influence to price action or lend any support, with Oil price dynamics turning out to be an exclusive driver of the pair’s ongoing corrective slide.
The pair has now retreated back below the key 1.3500 psychological mark – erasing a major part of the previous session’s positive move, as the focus now shifts to Thursday’s important release of the prelim US Q1 GDP print, which will provide fresh clues over the health of the world’s top economy and provide a fresh directional impetus.
Technical levels to watch