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Canadian Dollar Slides As Oil Prices Dip Ahead Of US Crude Inventory Data

The Canadian dollar weakened against its major rivals in early deals on Wednesday as crude oil fell ahead of the US crude oil inventory report, which is due out later in the day.

Crude futures edged below $107 a barrel, snapping a three-day rally, after data from American Petroleum Institute showed a larger-than-expected build in U.S. crude inventories. Reports of a possible release of U.S. strategic petroleum reserves also weighed on prices.

Light sweet crude oil for May delivery was quoted at $106.25 a barrel around 6:20 am ET, down by more than a dollar per barrel from its previous close of $107.33 a barrel on Tuesday.

Equities and commodities were down after Federal Reserve Chairman Ben Bernanke told ABC News in an interview that it's far too early to declare victory in the the U.S. economic recovery, as joblessness was still at a troubling high and housing markets still weak.

The Canadian dollar reached 1.3324 against the euro, its lowest level in the month of March. On the downside, the loonie is likely to re-test its key support around the 1.34 level.

Moody's Investors Service has affirmed Germany's AAA government bond rating and said its rating outlook remained 'stable' due to "very low event risk" despite the prolonged debt crisis.

The agency was of the view that the country's economic, financial and political characteristics indicated "very low event risk" despite ongoing economic and financial uncertainties in the euro area.

Against the yen, the Canadian dollar reached below 83.0 again after a gap of a day. The next downside target for the loonie-yen pair is seen around the 82.0 level.

The Canadian currency also fell to a 2-day low of 0.9950 against its US counterpart in early European trading on Wednesday. If the loonie weakens further, it may find target at par level with the buck in the near-term.

Traders keep a close eye in the south of the boarder where the US durable goods orders for February and the official weekly crude oil inventories data are due out in the North American session.

by RTTNews Staff Writer

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