USD/CAD recovers modestly after dropping below 1.2500
- Canada posted a surprise trade deficit in June.
- US Dollar Index continues to fluctuate in a relatively tight range on Thursday.
- WTI consolidates weekly losses, stays calm around $68.
The USD/CAD pair declined below 1.2500 in the early American session on Thursday but didn't have a difficult time limiting its losses. As of writing, the pair was still down 0.12% on the day at 1.2518.
US and Canada data fail to trigger a significant reaction
The upbeat data from Canada provided a modest boost to the CAD and weighed on USD/CAD. Statistics Canada reported that Canada's merchandise trade surplus with the world widened to C$3.2 billion in June after posting a deficit of C$1.58 billion in May. This reading came in much better than the market consensus for a deficit of C$0.68 billion.
On the other hand, the US Department of Labor reported that Initial Jobless Claims declined modestly to 385K in the week ending July 31 from 399K. Nevertheless, this print had little to no impact on the greenback's performance against its rivals and the US Dollar Index was last seen trading little changed on the day at 92.25.
Meanwhile, the barrel of West Texas Intermediate, which closed the first three days of the week in the negative territory, seems to have gone into a consolidation phase around $68 on Thursday, failing to provide a directional clue to USD/CAD.
On Friday, July labour market data from both the US and Canada will be watched closely by market participants.
Previewing the Nonfarm Payrolls (NFP) data, "July's Nonfarm Payrolls now carries lower expectations than originally seen after the ADP report, lowering the bar for a beat," said FXStreet analyst Yohay Elam. "Given the jittery market mood, it would not take much to see the dollar gain under almost any scenario."
Technical levels to watch for