USD/CAD drills weekly low near 1.3550 as Oil price recovers, US Dollar dribbles, PMIs eyed

• USD/CAD remains pressured at the lowest levels in seven days.
• US Dollar struggles on cautious optimism, mixed Fed concerns.
• Upbeat Canada GDP teases Loonie buyers; Oil benefits from sluggish USD, mildly positive sentiment.
• US/Canada PMIs, US employment clues eyed for clear directions.

USD/CAD holds lower ground at the weekly bottom as it extends the previous day’s fall amid a slightly upbeat risk profile and firmer Oil price, not to forget the sluggish US Dollar. That said, the Loonie pair prints mild losses around 1.3565 by the press time of early Thursday morning in Europe.

US Dollar Index (DXY) struggles to defend the weekly gains around 104.30, despite recently picking up bids, as mixed US data and Federal Reserve (Fed) talks flag concerns that the US central bank has limited upside room for the rates. With this in mind, allowed Wall Street Journal’s (WSJ) Nick Timiraos to suggest that the Federal Open Market Committee (FOMC) is likely to hold interest rates steady in June.

While US statistics were mostly unimpressive, Canada’s first quarter (Q1) Gross Domestic Product (GDP) offered a positive surprise to the Loonie buyers and drowned the USD/CAD pair the previous day. That said, the Canadian Q1 GDP rose to 0.8% QoQ versus 0.4% expected and 0.0% prior.

Elsewhere, the US Republican-controlled House of Representatives recently passed the debt-ceiling bill and favored the market’s optimism as the ruling Democrats dominate in the Senate and can easily avoid the default now. The same news exerts downside pressure on the US Dollar and the USD/CAD price of late.

Furthermore, WTI crude oil rises 1.22% on a day to around $68.50 as buyers return from the lowest levels in a month while snapping the two-day downtrend. It’s worth noting that the surprise build in the Oil inventories, per the industry reports, fails to weigh on the black gold ahead of this weekend’s OPEC+ meeting. The reason could be linked to the market sentiment, the recently firmer China Caixin Manufacturing PMI and the US Dollar’s failure to rise much.

Against this backdrop, S&P500 Futures print mild gains whereas the US Treasury bond yields rebound from weekly low.

Looking ahead, preliminary readings of the US and Canadian PMIs for May will join the US ADP Employment Change and vote on the bill to avoid the US default in the US Senate to direct intraday moves of the USD/CAD pair.

Technical analysis

A daily closing below the three-week-old rising support line, now immediate resistance around 1.3585, directs USD/CAD toward a convergence of the 50 and 100-DMA, around 1.3515-10.