USD/CAD retreats from highs, near 1.3500 ahead of ISM

The greenback is clinging to its daily gains vs. its Canadian neighbour in the second half of the week, with USD/CAD now hovering over the 1.3500 neighbourhood ahead of key US releases.

USD/CAD attention is now on ISM

Spot is posting gains since Friday, recovering the ground lost following last week’s deep pullback to fresh multi-week lows in sub-1.3400 levels (May 25).

The weekly up move is mainly bolstered by CAD weakness stemming from the rout in crude oil prices, with the barrel of West Texas Intermediate shedding around 8% since pre-OPEC meeting tops around the $52.00 mark to the current area above $48.00.

USD is also supported by rising expectations of a rate hike by the Federal Reserve at its meeting later in the month. CME Group’s FedWatch tool is seen the probability of such a scenario at above 91% today.

In addition, auspicious results from US ADP for the month of May have given extra oxygen to the buck via higher yields in the US money  markets, widening the spread vs. their Canadian peers.

Further data will see the key ISM Manufacturing ahead of the EIA’s weekly report on US crude oil inventories, while the RBC PMI is due in Canada.

USD/CAD significant levels

As of writing the pair is up 0.01% at 1.3501 facing the next hurdle at 1.3523 (high May 31) followed by1.3567 (20-day sma) and then 1.3575 (38.2% Fibo of the April-May rally). On the other hand, a break below 1.3437 (low May 31) would expose 1.3424 (low May 29) and finally 1.3360 (100-day sma).