Canadian Dollar Falls As Crude Oil Prices Slide

(RTTNews) - The Canadian dollar weakened against other major currencies in the European session on Wednesday, as oil prices fell sharply on renewed optimism about Iran peace talks and possible reopening of the Strait of Hormuz sooner than later.

Brent crude futures dropped to $84.56 a barrel, losing about 3%, on reports that Oman and Iran had discussed establishing a temporary joint maritime corridor in the Strait of Hormuz.

Traders await release of the PCE-based inflation readings from the U.S. as well as the Fed Chair's speech at the Jackson Hole symposium later in the week.

The weekly Crude Oil Stocks Change report from the U.S. Energy Information Administration (EIA) is scheduled to be released later today, and it is anticipated to reveal a 1.9-million-barrel gain for the week of August 21. These numbers would come after a 4.4 million gain the week before, indicating the fourth straight increase in crude supplies and temporarily allaying worries about an oil crisis.

In the European trading today, the Canadian dollar fell to a 5-1/2-year low of 0.9962 against the Australian dollar and a 1-week low of 1.3874 against the U.S. dollar, from early highs of 0.9913 and 1.3836, respectively. If the loonie extends its downtrend, it is likely to find support around 1.00 against the aussie and 1.41 against the greenback.

Against the euro and the yen, the loonie dropped to nearly a 3-week low of 1.6187 and a 6-day low of 114.62 from early highs of 1.6152 and 115.09, respectively. The loonie may test support 1.63 against the euro and 113.00 against the yen.

Looking ahead, U.S. MBA mortgage approvals data, U.S. Core PCE price index for July, U.S. durable goods orders for July, U.S. GDP for the second quarter, U.S. personal income and spending for July, and U.S. EIA crude oil data are slated for release in the New York session.