USD/CAD plummets to fresh 10-day lows below 1.31 as oil shoots higher after API report

• WTI leaps to $70 in post-settlement trade.
• Weekly API report shows a larger-than-expected draw in the U.S. crude oil inventories.
• US Dollar Index erases gains, appraches 95.

The USD/CAD pair came under heavy selling pressure in the late NA session as the commodity-sensitive loonie started to gather strength on rising crude oil prices. As of writing, the pair was down 0.85% on the day at 1.3055.

The weekly report released by the American Petroleum Institute in the last hour revealed that crude oil inventories fell by 8.6 million barrels in the week to September 7 to compared with analysts' estimate for a decrease of 805,000 barrels. Boosted by the data, the barrel of West Texas Intermediate, extended its daily gains and touched a fresh weekly high at $70. At the moment, the barrel of WTI is up 3.5% on the day at $69.85.

On Wednesday, investors will be closely following the EIA report, which is expected to show a draw of 750,000 barrels in crude oil stocks in the United States.  

Meanwhile, the US Dollar Index lost its footing amid the sharp fall witnessed in the USD/CAD pair and erased all of its daily gains. The index was last seen down 0.1% at 95.06.

The Canadian economic docket tomorrow will feature the capacity utilization data for the second quarter of the year. The PPI will be the only significant data release in the United States. 

Technical levels to consider

The immediate resistance for the pair aligns at 1.3080 (100-DMA) ahead of 1.3170 (daily high) and 1.3200/05 (psychological level/Sep. 4 high). On the downside, supports could be seen at 1.3000 (psychological level), 1.2960 (Aug. 7 low) and 1.2900 (Aug. 29 low).