USD/CAD continues to trade below 1.3000 as oil rally offsets broad USD strength
- WTI trades above $63 on escalating geopolitical tensions in Middle East.
- US Dollar Index extends recovery to 97 area on Friday.
- Coming up: ISM Manufacturing PMI and FOMC meeting minutes.
The USD/CAD pair rose above the 1.3000 handle earlier in the day but struggled to stretch higher as surging crude oil prices helped the commodity-related loonie stay resilient against the greenback. As of writing, the pair was up 0.06% on the day at 1.2986.
Oil rises on US-Iran conflict
After the US airstrike killed a top Iranian commander in Baghdad on Friday, crude oil prices rose sharply as investors started to price the potential negative impact on the oil supply from the area. The barrel of West Texas Intermediate (WTI) advanced to its highest level in seven months at $64.05 before pulling back modestly. Ahead of the US Energy Information Administration's weekly crude oil stock report, the WTI is trading at $63.30, adding 3.5% on a daily basis.
On the other hand, the greenback took advantage of the risk-off atmosphere with the US Dollar Index advancing beyond the 97 mark and turning positive for the week.
Before the Institue for Supply Management releases the Manufacturing PMI data, the index is up 0.22% on the day at 97. Later in the American session, the Federal Open Market Committee will publish the minutes of its December meeting as well. Previewing the minutes, "Fed officials have consistently been signalling that a policy change will require a material reassessment of the outlook, but the policy is not on a preset course," noted TD Securities analysts.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
