USD/CAD turns flat near 1.3240 on modest oil recovery
- WTI recovers toward $52 on hopes of deeper OPEC+ output cuts.
- US Dollar Index erases large portion of Friday's losses.
- Coming up: Markit and ISM Manufacturing PMI from US.
The USD/CAD pair rose to its highest level since early December at 1.3255 but struggled to push higher with the commodity-related loonie finding demand on the back of the modest recovery seen in crude oil prices. As of writing, the pair was virtually unchanged on a daily basis at 1.3238.
Output cut hopes support oil prices
After closing the previous week with a loss of more than 5%, the barrel of West Texas Intermediate (WTI) edged lower to a fresh multi-month low of $50.58 on Monday but was able to pare its losses. Reports suggesting that the OPEC+ was planning to deepen its oil output cut by 500K barrels per day to counter the negative impact of the coronavirus outbreak on the global oil demand. As of writing, the WTI was unchanged on the day at $51.55.
On the other hand, the broad-based USD strength on Monday doesn't allow the pair to edge any lower. The US Dollar Index, which fell sharply on Monday, was last up 0.3% on the day at 97.65.
In the second half of the day, the IHS Markit and the ISM will be both releasing the Manufacturing PMI data. Previewing the data, “we expect the manufacturing ISM index to be lifted back toward 50 in January by more positive sentiment following the Phase One trade deal," said TD Securities analysts. "Most of the regional manufacturing surveys that have been reported for January have signaled improvement, with the Chicago survey the main exception.”
Technical levels to watch for