- Crude oil prices rise sharply to help Loonie gather strength.
- Barrel of West Texas Intermediate gains more than 14%.
- US Dollar Index climbs to 98.70 on Monday.
After closing the previous week a tad below the 1.33 handle, the USD/CAD pair opened the new week with a large bearish gap as the surging crude oil prices provided a boost to the commodity-sensitive Loonie. Following a slump toward the 1.32 mark, however, the pair retraced a portion of the day’s losses and now seems to be moving sideways near mid-1.32s, erasing 0.3% on the day.
Eyes on the Middle East
Reports of missile and drone attacks on Saudi Arabia’s oil facilities, which is expected to bring the country’s output by 50% and the global supply by around 5%, caused crude oil prices to rally on Monday. After touching its highest level since late May at $63.33, the barrel of West Texas Intermediate retreated to $60 area during the European trading hours gathered momentum in started to push higher in the last couple of hours. As of writing, the WTI was up 14.3% on the day at $62.70.
On the other hand, the dismal market mood allowed the Greenback to capitalize on risk-off flows and outperform its major rivals. The US Dollar Index (DXY) in a single day erased all of last week’s losses and was up 0.8% on the day at 98.65, keeping the pair’s losses limited for the time being.
The only data from the US today showed that the business activity in New York’s manufacturing activity expanded at a softer pace than expected but was largely ignored by the market participants. Moreover, Statistics Canada reported that foreign portfolio investments in Canadian securities declined by $1.17 billion.
Ahead of the Federal Reserve’s critical monetary policy meeting on Wednesday, crude oil’s market valuation is likely to continue to impact the pair’s movements.
Technical levels to watch for
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