- USD/CAD gains bullish momentum early on Wednesday after two days of decline.
- WTI is trading in negative territory as markets wait for OPEC+ to unveil its production strategy.
- The USD is benefiting from safe haven currency flows amid escalating geopolitical tensions.
Having lost almost 300 pips in a two day drop, USD/CAD has reversed its direction and has risen towards 1.3600 on Wednesday. At time of writing, the pair quotes at 1.3570, up nearly 0.40% on the day.
WTI turns down ahead of OPEC+ decision
The sharp rise in crude oil prices helped the commodity-sensitive CAD outperform its rivals earlier in the week. After being informed that OPEC + could reduce crude oil production by up to 2 million barrels per daya barrel of West Texas Intermediate (WTI) gained more than 3% and hit its highest level since mid-September at $87 on Tuesday.
Nevertheless, the observed negative shift in risk sentiment appears to push oil prices lower mid-week and does not allow the CAD to retain its strength. OPEC+ will announce its production strategy throughout the day and the European Union is expected to introduce a new package of sanctions against Russia which will most likely include a cap on oil prices.
Meanwhile, US stock index futures are down sharply as geopolitical tensions continue to rise. The Russian President, Vladimir Putin plans to address the nation and announce a change in the status of the “special operation”. Russia’s ambassador warned earlier in the day that a US decision to send more military aid to Ukraine would increase the danger of a direct clash between Russia and the West.
In the second half of the day, the US economic docket will feature ADP private sector employment data and the ISM services PMI survey.
USD/CAD key levels
Source: Fx Street
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