Canadian Dollar Rallies On Higher Oil Prices

The Canadian dollar climbed against its most major counterparts in the European session on Wednesday, as oil prices rose after an industry data showed U.S. crude inventories fell last week and on signs of improved demand after relaxation of lockdown restrictions in several countries.

The American Petroleum Institute reported late Tuesday that U.S. crude supplies fell by 4.8 million barrels to 521.3 million barrels in the week to May 15.

The data also showed gasoline stockpiles edged down by 651,000 barrels, while distillate inventories climbed by 5.1 million barrels.

Official data from the Energy Information Administration (EIA) is due later in the session.

Oil demand in the world's top oil importer, China, has rebounded to pre-coronavirus levels, the Bloomberg reported earlier this week, citing sources.

China was the first to go into lockdown after the Covid-19 virus emerged in Wuhan, but it was also the first country to exit lockdown.

The demand outlook is improving further as several countries across the world ease lockdown measures.

Data from Statistics Canada showed that Canda's inflation fell 0.7 percent on a seasonally adjusted monthly basis in April.

That follows the 0.9 percent drop in March.

The loonie rose to 1.3868 against the greenback and 1.5211 against the euro, from its previous lows of 1.3961 and 1.5274, respectively. The loonie is poised to find resistance around 1.33 against the greenback and 1.51 against the euro.

The loonie reversed a decline to trade modestly higher against the yen, at 77.57. If the loonie rises further, it is likely to challenge resistance around the 81.5 level.

In contrast, the loonie held steady against the aussie, after having dropped to 0.9149 earlier in the session, which was the weakest level since December 31. The pair had ended yesterday's deals at 0.9111.

Looking ahead, at 2:00 pm ET, the Fed minutes from the April 28-29 meeting are set for release.