USD/CAD retreats to 1.2730 area amid oil rebound
- USD/CAD is pushing lower after closing in the positive territory on Monday.
- WTI recovers above $48 as markets await OPEC+ decision on output.
- US Dollar Index drops below 89.70 ahead of PMI data.
The USD/CAD pair closed the first trading day of 2021 in the positive territory but turned south on Tuesday with rising crude oil prices helping the commodity-sensitive CAD gathering strength against its rivals. As of writing, the pair was down 0.33% on a daily basis at 1.2735.
WTI reclaims $48
Earlier in the day, Reuters reported that OPEC and its allies, the group known as OPEC+, was mulling a 500,000 barrels per day output cut in February and helped crude oil prices gain traction. At the moment, the barrel of West Texas Intermediate is up 1.8% on a daily basis at $48.20.
On the other hand, the greenback is having a difficult time finding demand on Tuesday and allowing the bearish pressure on USD/CAD to remain intact. Investors seem to have turned optimistic about Democrats claiming majority in the Senate after the runoff election in Georgia.
Reflecting the positive shift in sentiment, the S&P 500 Futures are up nearly 0.3% on the day following Monday's sharp decline and the US Dollar Index is losing 0.25% at 89.65.
Later in the session, Raw Material Price Index and Industrial Price Index will be featured in the Canadian economic docket. Moreover, the ISM will publish the December Manufacturing PMI in the US.
Technical levels to watch for