USD/CAD slumps below 1.32 as oil recovery gathers momentum

• Crude oil stages decisive recovery after falling for two days.
• US Dollar Index test 98 handle after disappointing data.
• Annual inflation in Canada remained unchanged at 1.9% in September.

The USD/CAD pair advanced to a fresh session high of 1.3228 in the early trading hours of the American session but changed its direction with the commodity-related Loonie capitalizing on rising crude oil prices. As of writing, the pair was trading at 1.3188, losing 0.07% on a daily basis.

The data published by Statistics Canada on Wednesday revealed that inflation, as measured by the Consumer Price Index (CPI), stayed unchanged at 1.9% on a yearly basis in September and fell short of the market expectation of 2.1%. Although the initial market reaction caused the pair to gain traction, crude oil’s helped the CAD stay resilient.

Upbeat market mood boosts crude oil prices

United States (US) President Donald Trump today said that a trade deal with China was “being papered” and allowed market sentiment to improve in the second half of the day. The barrel of West Texas Intermediate (WTI), which spent a large portion of the day moving sideways near the $53 handle following a two-day long slide, is now up 1.6% on a daily basis at $53.60.

On the other hand, the US Dollar Index extended its slide after the US Census Bureau reported that retail sales in September declined by 0.3% to come in worse than the market expectation for an increase of 0.3% weighed on the Greenback. At the moment, the US Dollar Index is at its lowest level since September 13th at 97.99, erasing 0.32% on the day and keeping the pair’s losses limited for the time being.

Technical levels to watch for