USD/CAD rises toward 1.3600 as oil prices retreat

After having lost nearly 300 pips in a two-day slide, USD/CAD reversed its direction and climbed toward 1.3600 on Wednesday. As of writing, the pair was trading at 1.3570, where it was up 0.45% on a daily basis.

WTI turns south ahead of OPEC+ decision

The sharp upsurge witnessed in crude oil prices helped the commodity-sensitive loonie outperform its rivals earlier in the week. On reports claiming that OPEC+ could reduce crude oil production by as much as 2 million barrels per day, the barrel of West Texas Intermediate (WTI) gained more than 3% and climbed to its highest level since mid-September at $87 on Tuesday. 

The negative shift witnessed in the risk mood, however, seems to be causing oil prices to edge lower mid-week and doesn't allow the CAD to preserve its strength. OPEC+ is set to unveil its output strategy later in the day and the European Union is expected to introduce a new sanctions package against Russia that will most likely include a cap on oil prices.

Meanwhile, US stock index futures are down sharply as geopolitical tensions continue to escalate. Russian President Vladimir Putin is reportedly planning to address the nation and announce a change in the status of the "special operation." Russia's ambassador warned earlier in the day that the US' decision to send more military aid to Ukraine would raise the danger of a direct clash between Russia and the west.

In the second half of the day, the US economic docket will feature the ADP's private sector employment data and the ISM's Services PMI survey. 

ADP Jobs Preview: How the data creates a dollar selling opportunity ahead of the ISM Services PMI

Key levels to watch for