The USDCAD is trading higher on the day on the back of weaker crude oil prices and a firmer US Dollar. The US Dollar has received a boost on the day on stronger Treasury yields as well as trade optimism. Investors have also largely shaken off the launch of the impeachment inquiry on US President Donald Trump.
Crude oil prices dropped steadily on the day after it was announced by Reuters that Saudi oil production was back online earlier than expected. WTI crude is now trading below $56. This has weakened the commodity-backed Canadian Dollar, with the USDCAD now trading at 1.32813 ahead of the US crude oil inventories report.
The USDCAD has bounced off from the support level for the week, which is at the 38.2% Fibonacci level. This level was obtained from a trace of the Fibo tool from the Sep 10 swing low to the Sep 19 swing high. The pair has broken through the R1 pivot at 1.3266 and is now pushing towards the R3 pivot at 1.33073 (Sep high).
However, the ability of the pair to hit this level will depend on the response of crude oil prices to the US crude oil inventories report, which will hit the newswires shortly.
Further decline in crude oil prices will add to the gains on USDCAD, targeting 1.33073 initially. Above this level, further resistance lies at 1.33443.
If crude oil prices gain, this advance could be halted, which would then cause USDCAD to retest previous intraday support levels.