USD/CAD renews daily highs above 1.27 on crude oil sell-off
- WTI drops to weekly lows below $57 during the NA session.
- DXY looks to close the day higher following last Thursday's and Friday's losses.
- The next catalyst will be the PPI data from the U.S. on Tuesday.
The USD/CAD pair caught a fresh buying wave in the American trading hours and renewed its highest level since last Thursday at 1.2742 before going into a consolidation phase. As of writing, the pair was trading at 1.2730, adding 50 pips, or 0.39%, on the day.
Crude oil sell-off weighs on commodity-sensitive loonie
Crude oil prices failed to extend last week's rally on Monday despite optimistic remarks on output cut extension from OPEC officials on Monday. The barrel of West Texas Intermediate fell to its lowest level since November 6 at $56.30 and was last seen trading at $56.70, where it was virtually unchanged on the day.
On the other hand, amid a lack of fresh developments surrounding the tax bill, the US Dollar Index staged a technical recovery, supporting the pair's advance on Monday. After closing the previous week with small losses, the DXY is holding on to its daily gains. At the moment, the index is adding 0.12% at 94.42.
On Tuesday, the Bureau of Labor Statistics is going to release the October PPI numbers, which is expected to ease to 0.1% from 0.4% on a monthly basis. A higher-than-estimated reading is likely to provide an additional boost to the greenback as it would ramp up the expectations for an upbeat CPI reading on Wednesday.
Technical outlook
The immediate resistance for the pair aligns at 1.2755 (20-DMA) before 1.2800 (psychological level) and 1.2915 (Oct. 27 high). On the downside, supports could be seen at 1.2700 (psychological level), 1.2620 (Oct. 24 low) and 1.2530 (100-DMA).
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.
