After spending the majority of yesterday in a relatively tight range above the 1.32 mark, the USD/CAD pair came under a bearish pressure in the last hour as commodity-sensitive loonie started to gather strength on the back of a deep recovery seen in crude oil. Although the weekly report published by the EIA today showed that crude oil stocks in the U.S. increased by 10.3 million barrels in the week ending November 9 and the oil output average 10.1 million barrels per day, the barrel of West Texas Intermediate preserved its bullish momentum and rose to a fresh daily high of $57.23 per barrel over news of possible supply cut from OPEC members.
Expectations For Supply Cut From OPEC Members Boosted Crude Oil Price
Meanwhile, the greenback failed to capitalize on strong retail sales data and allowed the pair to extend its slide as broad based investor sentiment over USD turned dovish following bearish rout in Wall Street last night. The USD/CAD pair remained under some selling pressure for the second consecutive session today and dropped to fresh weekly lows in the last hour, albeit quickly recovered few pips thereafter. As of writing this article, the USD/CAD pair is trading at 1.3167 down by 0.08% on the day. A strong follow-through up-move in crude oil prices, which tend to underpin demand for the commodity-linked currency – Loonie, remains as one of the key factors exerting some downward pressure on the major today. Investors expect members of OPEC to agree on cuts of around 1 million bpd or more when they meet on Dec. 6 in Vienna for its policy-setting meeting.
The pair extended its retracement slide from near four-month tops, levels just above mid-1.3200s touched on Wednesday, but now seems to have found some support near mid-1.3100s ahead of the second-tier economic releases from the US and Canada. Today’s economic docket features the release of monthly Manufacturing Sales data from Canada, which coupled with industrial production data and capacity utilization rate from the US might provide some short-term impetus on the last trading day of the week. On a sustained break below mid-1.3100s, the pair is likely to accelerate the fall towards 1.3110 intermediate support en-route the 1.3085 region. On the flip side, the 1.3200 handle is likely to act as an immediate resistance, above which the pair is likely to aim towards decisively breaking through the 1.3250-60 heavy supply zone.
This article was originally posted on FX Empire
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