USD/CAD drops to multi-week lows near 1.33 as oil recovery gathers momentum

• WTI climbs toward $50 on reports of Saudis looking to cut exports.
• Ivey PMI improves in December in Canada.
• US Dollar Index fails to recover after the weak ISM PMI report.

After spending the first half of the day in a relatively tight range near 1.3350, the USD/CAD pair came under a renewed pressure in the last hour and fell to its lowest level since December 10 at 1.3302. As of writing, the pair was trading at 1.3307, losing 0.68% on the day.

A sharp increase seen in crude oil prices seems to be the primary reason behind the pair's recent slump. After the Dow Jones Newswires reported that Saudi Arabia was planning to cut exports by 800,000 barrels per day from November levels to an average of 7.1 million bpd, the barrel of West Texas Intermediate rose to its highest level in three weeks at $49.75 to boost the demand for the commodity-related loonie and was last seen up 2.6% on the day at $49.50. Additionally, the Ivey PMI in Canada improved to 59.7 in December from 57.2 in November to lend additional support to the currency.

On the other hand, the ISM reported that the Non-Manufacturing PMI in the U.S. fell to 57.6 to miss the experts' forecast of 59. At the moment, the US Dollar Index is losing 0.5% on the day at 95.70. Later in the session, Atlanta Fed President Bostic is scheduled to deliver a speech.

Technical levels to consider