USD/CAD drops toward mid-1.32s as WTI jumps above $55

• WTI rises to fresh 2-week highs above $55.
• Industrial production in the U.S. surprise to the downside.
• US Dollar Index pulls away from daily highs, continues to float above 97.

After spending the majority of the day in a narrow trading band above the 1.33 mark, the USD/CAD came under pressure in the early NA session and dropped toward the mid-1.32s as the commodity-sensitive loonie took advantage of rising crude oil prices. As of writing, the pair was trading a little above the daily low it set at 1.3255 in the last hour.

Since finding support near the $52 handle earlier in February, the barrel of West Texas Intermediate closed the last seven days in the positive territory and carried its recovery rally into an eighth day on Friday. Ahead of the weekly oil rig count published by the Baker Hughes energy services, the WTI is trading at $55.30, adding 1.6% on the day. Rising hopes of the U.S. and China reaching a trade deal ahead of the deadline seems to be the primary boost behind crude oil’s upsurge on Friday.

On the other hand, the greenback struggled to preserve its bullish momentum after touching its highest level of 2019 at 97.37 earlier in the day as the data published by the Fed showed that industrial production contracted by 0.6% on a monthly in January and the capacity utilization decreased to 78.2% in the same period from 78.8% in December. At the moment, the DXY is up 0.13% on the day at 97.15. The UoM’s Consumer Sentiment Index, which improved to 95.5 in February from 91.2 in January, seems to be helping the DXY limit its losses.

Technical levels to consider