USD/CAD drops to multi-year lows near 1.2330 amid oil rally, USD weakness
- USD/CAD fell sharply during the American session on Wednesday.
- WTI climbed above $64 after weekly EIA report.
- US Dollar Index stays in the negative territory below 91.00 ahead of FOMC announcements.
The USD/CAD pair spent the first half fluctuating in a relatively tight range around 1.2400 but came under strong bearish pressure during the American trading hours. As of writing, the pair, which touched its lowest level since February 2018 at 1.2328, was trading at 1.2339, down 0.45% on a daily basis.
CAD capitalizes on upbeat data, rising oil prices
The sharp upsurge witnessed in crude oil prices provided a boost to the commodity-sensitive loonie on Wednesday. After the weekly report published by the Energy Information Administration (EIA) revealed that crude oil inventories in the US continued to increase, the barrel of West Texas Intermediate (WTI) advanced to a fresh five-week high of $64.49. At the moment, the WTI is up 1.7% on the day at $64.05.
Meanwhile, the data published by Statistics Canada revealed Retail Sales in February increased by 4.8% following January's contraction of 1.1%. This reading came in stronger than the market expectation of 4% and helped the CAD outperform its rivals.
On the other hand, the US Dollar Index (DXY) lost its traction ahead of the FOMC's policy announcements and allowed USD/CAD to extend its daily slide. Currently, the DXY is posting small daily losses at 90.88. Although the FOMC is not expected to make any changes to its policy settings, investors will keep a close eye on Chairman Jerome Powell's remarks regarding the economic outlook and will look for clues regarding the timing of tapering.
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.
