USD/CAD advances to October highs above 1.30 as WTI slips below $73

US Dollar Index looks to end the day in red below 95.50.
WTI loses more than 2% on Wednesday.
Annual PPI in the U.S. misses market expectations.

Eren Sengezer FXStreet

Despite the broad-based USD weakness, the USD/CAD pair is recording robust gains on Wednesday as the commodity-sensitive loonie struggles to find demand amid crude oil sell-off. As of writing, the pair is trading at its highest level since September 28 at 1.3020, adding 0.57% on a daily basis.

After recovering above $75 earlier in the day, the barrel of West Texas Intermediate lost its traction as escalating tensions between the U.S. and China revived concerns over weak global oil demand. Ahead of the weekly API stock report, the barrel of WTI lost more than 2% on the day and broke below $73 to weigh on commodity currencies.

On the other hand, the selling pressure witnessed on the greenback could be limiting the pair's gains in the session. The US Dollar Index, which renewed its highest level in 7-weeks at 96.16 yesterday, reversed its course on Wednesday and looks to close the day around 0.3% lower below 95.50. Today's data from the United States showed that the PPI rose 2.6% on a yearly basis to miss analysts' estimate of 2.6%.

In the meantime, Statistics Canada reported that building permits rebounded with a 0.4% growth in August following July's 1.5% contraction.

Technical levels to consider

The initial resistance for the pair aligns at 1.3075 (100-DMA) ahead of 1.3200 (psychological level/Sep. 10 high) and 1.3290 (Jul. 19 high). On the downside, supports could be seen at 1.3000 (psychological level), 1.2960 (200-DMA) and 1.2885 (Oct. 5 low).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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