USD/CAD struggles to find direction, trades little changed around 1.2700
- USD/CAD is fluctuating in a narrow trading channel on Wednesday.
- Crude oil prices continue to push higher ahead of EIA data.
- US Dollar Index stays calm below 90.50 as focus shifts to US inflation report.
The USD/CAD pair dropped to its lowest level in more than two weeks at 1.2672 on Wednesday but didn't have a difficult time erasing its losses. As of writing, the pair was virtually unchanged on a daily basis at 1.2695.
Eyes on key US data
Rising crude oil prices provided a boost to the commodity-related loonie during the first half of the week. After the weekly report published by the American Petroleum Institue showed that Crude Oil Stocks declined by 3.5 million barrels last week, the barrel of West Texas Intermediate (WTI) reached its highest level in more than a year at $58.73. Ahead of the US Energy Information Administration's (EIA) Crude Oil Stocks Change data, the WTI is up 0.4% on the day at $58.65.
In the meantime, the US Dollar Index (DXY), which fell sharply amid slumping US Treasury bond yields earlier in the week, is staying relatively quiet below 90.50 as investors await the US inflation report.
The market consensus points out to a small decline in the annual Core Consumer Price Index (CPI) to 1.5% in January from 1.6% in December. A stronger-than-expected increase in core inflation could provide a boost to the USD in the second half of the day and allow USD/CAD to stage a rebound.
Later in the session, Bank of Canada Deputy Governor Timothy Lane will be delivering a speech at 16:30 GMT.
Technical levels to watch for