USD/CAD slumps below 1.3280 on oil rally, hawkish BoC commentary

• BoC Governor Poloz says monetary conditions are “about right.”
• WTI gains more than 1.5% on OPEC headlines.
• US Dollar Index posts modest daily gains to limit pair’s losses.

After advancing to its highest level in more than a month at 1.3327 earlier in the day, the USD/CAD pair came under strong bearish pressure during the American trading hours as Bank of Canada Governor Poloz’s hawkish comment and rising crude oil prices helped the CAD find demand. As of writing, the pair was trading at 1.3278, losing 0.2% on a daily basis.

While speaking at an event organized by the Ontario Securities Commission in Toronto on Thursday, Poloz argued that monetary conditions were “about right” given the current situation to hint that the BoC is unlikely to consider a rate cut anytime soon.

Oil jumps on hopes of OPEC extending production cuts

In the meantime, on the back of Reuters report that showed the  Organization of the Petroleum Exporting Countries (OPEC) was likely to extend the existing oil output cuts until June when the group meets in December, crude oil staged an impressive rally to provide an additional boost to the commodity-related loonie. At the moment, the barrel of West Texas Intermediate (WTI) is adding 1.8% on the day at $58.10.

On the other hand, the Philly Fed Manufacturing Index improved to 10.4 in November and surpassed the market expectation of 7 to help the greenback show resilience against its rivals with the US Dollar Index rebounding to 97.90 in the second half of the day.

On Friday, the macroeconomic calendar will feature Markit’s preliminary Manufacturing and Services PMI from the US and Retail Sales data from Canada.

Technical levels to watch for