USD/CAD drops toward 1.2600 as CAD capitalizes on surging oil prices

• USD/CAD reversed its direction after climbing above 1.2650.
• WTI is rising more than 3%, closes in on $62.00.
• US Dollar Index clings to small daily gains below 91.00.

The USD/CAD pair advanced to a daily high of 1.2659 in the early American session but lost its traction with rising crude oil prices providing a boost to the commodity-related loonie and dropped to 1.2604. As of writing, the pair was down 0.1% on the day at 1.2618.

Oil rally helps CAD gather strength

After spending the first half of the day trading in a relatively tight range around $60,  the barrel of West Texas Intermediate (WTI) rose sharply despite the fact that the weekly EIA report showed a huge increase in US crude oil stocks. At the moment, WTI is up 3.88% at $61.72.

On the other hand, the US Dollar Index is staying in the positive territory at 90.90 supported by a more-than-6% increase in the 10-year US Treasury bond yield and limiting USD/CAD’s losses.

The data from the US showed on Wednesday that employment in the private sector increased by 117,000 in February, compared to analysts’ estimate of 177,000. Additionally, the ISM Services PMI edged lower to 55.3 in February and missed the market expectation of 58.7. Nevertheless, these disappointing figures failed to trigger a significant market reaction.

Later in the session, the US Federal Reserve will release its Beige Book.  

Technical levels to consider