Higher US inventories drag down crude and the Canadian dollar
USD/CAD has erased a wobble lower on NAFTA optimism and is back above 1.2900.
The pair is challenging the session high of 1.2919 as oil price sink. WTI Crude is down $0.84 to $71.35 from a high of $72.29 with the bulk of the losses coming following weekly US inventory data.
Crude hit a cycle high on Tuesday but finished soft and that weakness has continued today.
USD/CAD is being whipped around by oil, broad USD moves and China sentiment but the next big swing will come from the Bank of Canada decision on May 30. The odds of a hike have fallen to 27% but signals beyond this meeting will also be critical.
Technically, the latest rallies have topped out just above 1.29 and the May 14 high of 1.2924 is the key short-term level to watch. In the bigger picture, this pair is tightening up and if there's a big move on the BOC, it will be one to go with.
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