USD/CAD discovers support near 1.3200 as oil price eases further
- USD/CAD discovers buying interest near 1.3200 despite a sell-off in the US Dollar.
- The Canadian Dollar has weakened due to a significant fall in the oil price.
- Oil prices fell sharply as commercial shipments resumed from Red Sea route.
The USD/CAD pair finds cushion near the round-level support of 1.3200 in the European session. The Loonie asset has rebounded to near 1.3220 amid a sharp sell-off in oil prices due to higher inventories for the week ending December 22 and resumption of oil shipment from Red Sea route.
West Texas Intermediate (WTI), futures on NYMEX, fell 1.5% on Thursday to near $73.00. The oil price faced an intense sell-off after an establishment of US-led maritime taskforce to protect commercial oil vessels against Houthi attacks.
In addition to trade resumption from Red Sea, higher oil stockpiles have weighed heavily on the oil price. The United States Energy Information Administration (EIA) reported on Wednesday crude inventories were higher by 1.8 million barrels.
It is worth noting that Canada is the leading exporter of oil to the United States and lower oil prices weigh on the Canadian Dollar.
Meanwhile, S&P500 futures added some gains in the London session, portraying an improvement in the risk-appetite of the market participants. The US Dollar Index (DXY) has printed a fresh five-month low near 100.60. The USD Index struggles for a firm footing as investors continue to bet in favour of rate cuts by the Federal Reserve (Fed) from March 2024.
Amid festive season, the economic calendar is very light, therefore, second-tier weekly Initial Jobless Claims data will be keenly watched by the market participants. Next week, the employment data from Canada and the US will be of utmost importance.