USD/CAD erases daily gains as oil stages decisive rebound, trades around mid-1.32s

• WTI rises above $57 boosted by OPEC commentary.
• US Dollar Index continues to trade sideways near 98.30.
• FOMC Chairman Powell repeats outlook for economy remains favourable.

The USD/CAD pair rose to its highest level in a month at 1.3270 but lost its traction during the American trading hours as the commodity-related loonie gathered strength on recovering crude oil prices. As of writing, the pair was trading at 1.3254, adding 0.17% on a daily basis.

Oil rebounds on upbeat demand outlook

The Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), Mohammad Barkindo, on Wednesday said the fundamentals of the global economy was still strong and noted that there was no sign of a global economic recession. Barkindo further added that oil demand figures in 2020 have the potential for an upside swing to provide a boost to crude oil prices.  

After dropping all the way down to $56.16 earlier in the day, the barrel of West Texas Intermediate gained traction and was last seen trading at $57.30, adding nearly 1% on a daily basis.

On the other hand, the US Dollar Index ignored the Federal Open Market Committee (FOMC) Chairman Powell’s  comments on the economic outlook and extended its sideways grind near the 98.30 mark, allowing the CAD’s market valuation to continue to impact the pair’s action. The only data from the US on Wednesday revealed that annual inflation in October, as measured by the core Consumer Price Index (CPI), ticked down to 2.3% and missed the market expectation of 2.4% but had little to no impact on the USD.

Technical levels to watch for