USD/CAD clings to small daily gains around 1.2170

FX
  • USD/CAD continues to trade near monthly high set on Friday.
  • Rising crude oil prices help CAD limit its losses.
  • US Dollar Index extends sideways grind around 90.50.

The USD/CAD pair reached its highest level since mid-May at 1.2178 on Friday and seems to have gone into a consolidation phase on Monday. As of writing, the pair was posting small daily gains at 1.2168.

Investors await FOMC meeting

The broad-based USD strength on the back of recovering US Treasury bond yields allowed USD/CAD to gain traction ahead of the weekend. After gaining 0.42% on a weekly basis, the US Dollar Index (DXY) is staying flat around 90.50 on Monday as investors move to the sidelines ahead of this week’s key events.

On Tuesday the US Census Bureau will release the May Retail Sales report. More importantly, the FOMC will announce its monetary policy decision on Wednesday and publish the updated Summary of Economic Projections, which will provide fresh clues regarding the timing of a hawkish shift in the policy. 

On the other hand, crude oil prices continue to push higher, helping the commodity-sensitive loonie stay resilient against its rivals. At the moment, the barrel of West Texas Intermediate (WTI) is trading at its highest level since October 2018 at $71.30, rising 0.7% on a daily basis.

Later in the session, Manufacturing Sales will be featured in the Canadian economic docket. There won’t be any high-tier data releases from the US.

Technical levels to watch for

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