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  • USD/CAD reversed its direction after renewing two-year lows. 
  • WTI pared early gains and turned red below $44.50 ahead of EIA data.
  • US Dollar Index posts small gains following Tuesday’s sharp decline.

The USD/CAD pair lost 70 pips on Tuesday and extended its slide during the Asian trading hours on Wednesday to touch its lowest level in two years at 1.2914. Ahead of the American session, the pair started to erase its losses and was last seen gaining 0.12% on the day at 1.2947.

CAD weakens as WTI remains on the back foot 

The heavy selling pressure surrounding the USD caused USD/CAD to remain bearish since the beginning of the week. The risk-positive market environment weighed on the US Dollar Index (DXY) and dragged it to a fresh 31-month low of 91.10. However, the poor performance of major European equity indexes and the 0.25% decline witnessed in the S&P 500 Futures seem to be helping the greenback stay resilient against its peers. At the moment, the DXY is up 0.13% at 91.43.

Meanwhile, the commodity-sensitive loonie is struggling to find demand amid falling crude oil prices. The barrel of West Texas Intermediate (WTI) is down 0.4% on the day at $44.20 as investors await clarity on the output strategy of OPEC+ in 2021.

Later in the day, the ADP will release the November Employment Change data for the US alongside the ISM NY’s Business Conditions Index. The Canadian economic docket will feature the third-quarter Labor Productivity report.

Technical levels to watch for