USD/CAD clings to small gains above 1.3430 as USD starts paring early losses
- US Dollar Index slumps to multi-week lows near 97 on Monday.
- China announced higher tariffs on $60 billion worth of U.S. products.
- WTI erases large part of early gains, continues to trade above $62.
After losing 60 pips on Friday, the USD/CAD pair is posting small gains on Monday despite the fact that the latest developments in the U.S.-China trade dispute seem to be hurting the greenback. As of writing, the pair is up 0.2% on a daily basis at 1.3443.
In response to the U.S. hiking the tariff rate to 25% from 10% on $200 billion worth of Chinese imports last week, China's finance ministry today announced that it plans to set import tariffs ranging from 5% to 25% on $60 billion worth of U.S. products starting June 1 despite President Trump's warning. “China should not retaliate-will only get worse,” Trump said on Twitter.
With the initial market reaction, the 10-year Treasury bond yield fell to its lowest level since late March and dragged the US Dollar Index down to the 97 handle for the first time since April 18. However, the index staged a modest rebound in the last hours to keep the pair's losses limited. At the moment, the DXY is down 0.13% on a daily basis at 97.20.
On the other hand, following a sharp upsurge amid escalating tension in the Middle East on reports of Saudi oil tankers getting attacked, crude oil prices turned south with the sentiment turning sour in the NA session and didn't allow the commodity-sensitive loonie to stay resilient against the dollar. At the moment, the barrel of West Texas Intermediate is clinging to small daily gains above the $62 mark.
There won't be any macroeconomic data releases in the remainder of the day and participants are likely to stay focused on trade headlines and crude oil prices.
Technical levels to watch for