Canadian Dollar Climbs As Oil Prices Rally

The Canadian dollar drifted higher against its major rivals in the European session on Monday, as oil prices climbed after Iraq pledged to cut its oil output by a further 400,000 barrels per day and Saudi Aramco said demand will continue to improve.

Crude for September delivery rose $0.62 to $41.84 per barrel.

Iraq said on Friday that it will cut production by 400,000 barrels per day in August and September to compensate for failing to comply with a deal made in April to limit oil production.

Saudi Arabian Aramco Chief Executive Amin Nasser said on Sunday the company has seen signs of a recovery in global oil demand as economies gradually open up. Crude consumption in Asia is almost back to pre-Covid-19 levels, Nasser added.

The easing of lockdown restrictions and signs of improvement in China's industrial activity also supported prices.

Deflation at China's factories eased in July, driven by a rise in global energy prices and as industrial activity climbed back towards pre-coronavirus levels, data showed.

The loonie spiked up to 4-day highs of 1.5722 versus the euro and 0.9561 against the aussie, off its early lows of 1.5784 and 0.9591, respectively. Next key resistance for the loonie is seen around 1.52 versus the euro and 0.94 against the aussie.

The loonie reversed from its early low of 78.99 versus the yen, rising to 79.32. On the upside, 81.00 is likely seen as the next resistance level for the loonie.

The Canadian currency recovered to 1.3371 against the greenback, from a low of 1.3395 set at 4:00 am ET. Should the loonie rises further, it may likely seek resistance around the 1.29 level.