Canadian Dollar Rises As OPEC Debates Deeper Production Cuts

The Canadian dollar drifted higher against its major counterparts in early New York deals on Thursday amid higher oil prices, as the OPEC meets in Vienna to discuss steeper production cuts to reduce supply glut in the market.

Crude for January delivery rose $0.26 to $58.69 per barrel.

Sources say that Saudi Arabia and Venezuela are proposing additional production cuts of 500,000 barrels per day from their current level of 1.2 million bpd.

If agreed, the output quota would be raised to 1.7 million barrels from 1.2 million barrels.

On Friday, the cartel will hold a meeting with Russia and other producers, a group known as OPEC+

A report from the Energy Information Administration released on Wednesday showed a steeper than expected weekly drop in crude oil inventories.

Crude oil inventories tumbled by 4.9 million barrels in the week ended November 29th compared to estimates for a decrease of about 1.7 million barrels.

Data from Statistics Canada showed that Canada's trade deficit narrowed more than expected in October.

Trade deficit narrowed to C$1.1 billion in October from C$1.2 billion in September. Economists had forecast a C$1.4 billion shortfall.

Exports rose 0.8 percent in October, while imports increased 0.5 percent.

The loonie strengthened to more than a 4-week high of 1.3158 against the greenback and near a 4-week high of 82.76 against the yen, from its early lows of 1.3203 and 82.42, respectively. Next immediate resistance for the loonie is seen around 1.30 against the greenback and 83.5 against the yen.

Reversing from its early lows of 0.9042 against the aussie and 1.4628 against the euro, the loonie climbed to a 3-day high of 0.8982 and an 8-day high of 1.4598, respectively. If the loonie rises further, 0.88 and 1.44 are likely seen as its next resistance levels against the aussie and the euro, respectively.

Looking ahead, U.S. factory orders for October and Canada Ivey PMI for November are scheduled for release in the New York session.