USD/CAD ends week slightly higher after Friday’s rally

The Loonie dropped across the board on Friday and erased weekly gains versus the US dollar. Lower-than-expected inflation data from Canada triggered a decline of currency. 

The CPI rose 0.1% in May, below the 0.2% expected. The annual rate stood at 1.3%. Weak inflation numbers offset the latest comments from Bank of Canada officials, that pointed toward a possible hike before year end. 

USD/CAD jumped to 1.3308 after the data but failed to hold on top and pulled back. During the last hours, it has been hovering around 1.3260, consolidating a weekly gain of less than 30 pips. 

The pair continues to consolidate near multi-month lows, despite the 3% slide in crude oil prices. If the next week, oil recovers ground, the downside momentum could rise sharply. 

Levels to watch 

Despite the weekly gain, the bearish tone still prevails with price consolidating under the 20-week moving average. 

To the downside, the immediate key support is support seen around 1.3200 and then, attention would turn to 1.3160, the June low; under that area, the next medium-term support could be seen around the 1.30 handle. 

Any recovery below 1.3420 could be seen as corrective. If the greenback breaks above 1.3420, the bearish tone would be seriously damaged.