USD/CAD drops below 1.2800 pressured by rising crude oil prices

• USD/CAD broke below 1.2800 during European trading hours.
• Crude oil prices are rising on demand recovery hopes.
• US Dollar Index consolidates Wednesday’s gains around 91.00.

The USD/CAD pair staged a modest rebound during the first half of the week and rose to 1.2835 on Wednesday. With crude oil prices gaining traction, however, the commodity-related loonie started to gather strength against its rivals and caused USD/CAD to turn south. As of writing, the pair was down 0.23% on a daily basis at 1.2784.

WTI trades above $46 on Thursday

Supported by heightened hopes for a steady recovery in oil demand on positive coronavirus vaccine developments, the barrel of West Texas Intermediate (WTI) gathered bullish momentum on Thursday. At the moment, the WTI is rising by more than 1% at $46.18.

On the other hand, the greenback is struggling to build on Wednesday’s gains as investors seem to be staying on the sidelines ahead of macroeconomic data releases from the US. The US Dollar Index, which closed the previous two days in the negative territory, is currently virtually flat on the day at 91.10.

Later in the session, the US Department of Labor will release its weekly Initial Jobless Claims data. More importantly, the US Bureau of Labor Statistics will publish the November Consumer Price Index (CPI) figures.

In the meantime, the Bank of Canada (BoC) announced on Wednesday that it left its policy rate unchanged at 0.25% as expected. In its policy statement, the BoC reiterated that rates are not expected to go up until 2023 but failed to trigger a significant market reaction.

Technical levels to watch for