Canadian Dollar Strengthens Amid Higher Oil Prices

The Canadian dollar climbed against its most major opponents in early European deals on Wednesday, as oil prices advanced after an industry data showed larger than expected draw in oil inventories last week.

Data from the American Petroleum Institute showed that U.S. crude inventories fell by 9.2 million barrels in the week to August 11, higher than forecasts for a 3.1 million barrel fall.

Gasoline inventories rose by 0.3 million barrels, while distillate inventories were down by 2.1 million barrels for the week.

Attention now turns to the official data from the Energy Information Administration later in the day, which is expected to show a 3.2 million barrel drop in crude oil inventories.

Further underpinning the currency was risk appetite, as geopolitical tensions receded and investors await minutes from the Federal Reserve's July meeting for clues regarding the future pace of interest rate hikes.

The currency was lower against its key counterparts in the Asian session, with the exception of the yen.

The loonie that closed yesterday's trading at 86.75 versus the yen climbed to an 8-day high of 87.16. The loonie is likely to find resistance around the 89.00 region.

The loonie hit a 6-day high of 1.4888 against the euro, off its early low of 1.4986. The next possible resistance for the loonie is seen around the 1.47 mark.

The loonie reversed from an early low of 1.2770 against the greenback, edging up to 1.2729. If the loonie rises further, it may find resistance around the 1.25 area.

On the flip side, the loonie dropped to 1.0016 against the aussie, after having advanced to 0.9970 at 6:15 pm ET. On the downside, 1.01 is possibly seen as the next support level for the loonie.

The latest survey from Westpac Bank revealed that the Australian economy picked up steam in July.

The bank's leading index moved up 0.12 percent on month, the bank said.

Looking ahead, U.S. housing starts and building permits, both for July, and U.S. crude oil inventories data are slated for release in the New York session.

At 2:00 pm ET, U.S. Federal Reserve is scheduled to publish minutes of its most recent monetary policy meeting.