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  • Declining OPEC output weighs on crude oil prices.
  • US Dollar Index clings to small daily gains above 98.
  • Canadian GDP growth in May beats expectations, attention turns to FOMC.

The USD/CAD pair came under modest bearish pressure during the American trading hours and slumped to its lowest level in more than a week at 1.3106 as the Loonie capitalized on the upbeat growth data from Canada and rising crude oil prices. However, with the barrel of West Texas Intermediate reversing its course in the last hour and turning negative on the day, the commodity-related CAD lost its strength, allowing the USD/CAD pair to turn flan on the day near 1.3140 handle.

Crude oil prices  fluctuate on Wednesday

The weekly data published by the Energy Information Administration today showed that crude oil stocks in the US declined by 8.5 million barrels per day in the week ending July to provide the initial boost to crude oil prices, which faded away quickly.  Later in the day, the latest Reuters survey revealed that OPEC’s oil output slumped to its lowest level since 2011 in July to help the WTI limit its losses. As of writing, the WTI was posting small daily losses at $58.20.

In the meantime, Statistics Canada today reported that the real gross domestic product (GDP) in Canada expanded by 0.2% in May to beat the market expectation of 0.1%.

FOMC set to announce a 25 bps rate cut

Later in the session, the FOMC will announce its interest rate decision and will release its policy statement. Previewing the event, “We expect the FOMC to lower the federal funds target rate (FFTR) by 25bps in July. We also see a growing prospect of a second 25bps rate cut in September (instead of December, our current forecast),” said Standard Chartered analysts.

“We expect the description of the US economic situation in July’s statement to be broadly similar to that in the June statement.”

FOMC Preview: What 12 major banks are expecting from July meeting?

Technical levels to watch for