USD/CAD rebounds toward 1.4200 following shar drop caused by oil rally

• US Dollar Index climbs to weekly highs above 100.30.
• WTI spikes above $27 on hopes of Russia and Saudi Arabia reducing oil output.
• Initial Jobless Claims in US jumped to new all-time high above 6 million.

The USD/CAD pair rose to a fresh daily high of 1.4300 during the early trading hours on the back of broad-based USD strength but made a sharp U-turn to drop all the way to 1.4080 as surging crude oil prices boosted the demand for the loonie.

However, with the oil rally losing its steam and the greenback outperforming its rivals, the pair erased the majority of its losses and was last seen trading at 1.4170, still erasing 0.1% on a daily basis.

Oil rally fades

US President Trump said on Thursday that he spoke to Saudi Arabia's Crown Prince and Russian President Putin and added that he was expecting an oil output reduction of approximately 10 million barrels. Although the barrel of West Texas Intermediate (WTI) spiked above $27 with the initial reaction, lack of an official announcement forced the WTI to erase a portion of its gains.

Reuters reported that there was no set date for an emergency meeting between OPEC and non-OPEC producers yet and a senior Trump administration official noted that the US did not know the former details of oil output cuts. As of writing, the WTI was trading at $23.90, adding 13% on the day.

On the other hand, the data published by the US Department of Labor revealed that Initial Jobless Claims were 6.6 million during the week ending March 28th. Following this data release, the US Dollar Index (DXY) gained traction during the American session and broke above the 100 handle to help the pair erase its losses. At the moment, the DXY is up 0.9% on the day at 100.40.

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