USD/CAD edges higher above 1.26 handle as WTI drops below $46
The USD/CAD pair extended its daily gains in the NA session as the commodity-sensitive loonie came under pressure after crude oil prices dropped sharply following the weekly EIA report. As of writing, the pair was trading at 1.2605, gaining 0.75% on the day.
According to EIA's weekly petroleum report, commercial crude oil inventories in the U.S. decreased by 5.4 million barrels for the week ending August 25. However, the daily production level advanced to 9.530 million barrels from 9.528 million barrels, weighing on crude oil prices. After falling to a fresh daily low at $45.85, the barrel of West Texas Intermediate was able to retrace a portion of the initial losses and is now trading at $46, losing 0.75% on the day.
- EIA: US commercial crude oil inventories decreased by 5.4 mln barrels
- WTI drops to lows near $45.80 on EIA
On the other hand, the fact that the greenback is preserving its daily gains on Wednesday keeps the bullish momentum alive for the pair. On the back of today's robust data from the U.S., the US Dollar Index jumped to a daily high at 92.80 and is now moving sideways around 92.70, adding 0.5% on the day.
Technical outlook
The RSI on the H4 chart recently touched the 70 mark, suggesting that the pair could struggle to extend its gains in the short-term before unless it makes a technical correction. The pair could face the initial hurdle at 1.2640 (50-DMA), 1.2700 (psychological level) and 1.2780 (Aug. 15 high). On the downside, supports could be seen at 1.2540 (10-DMA), 1.2500 (psychological level) and 1.2415 (Jul. 27 low).
Today's data from the U.S. and Canada
- US: Private sector employment increased by 237,000 jobs in August
- US: Real GDP increased at an annual rate of 3.0% in second quarter of 2017
- Canada: Current account deficit widened by $3.4 billion in second quarter to $16.3 billion