USD/CAD rebounds above 1.34 boosted by crude oil selloff

• EIA reports larger-than-expected buildup in crude oil stocks.
• WTI slumps to its lowest level since January.
• US Dollar Index pares early losses, turns flat near 97.20.

The USD/CAD pair extended its weekly decline to its lowest level in two weeks at 1.3360 earlier in the session but reversed its direction in the last hour after the sharp fall in crude oil prices weighed on the commodity-related loonie. As of writing, the pair was up 0.1% on a daily basis at 1.3404.

The weekly report published by the Energy Information Administration today showed that crude oil stockpiles increased by 6.8 million barrels in the week ending May 31 vs experts' estimate for a decline of 0.8 million barrels. Crude oil prices came under heavy selling pressure following the data and the barrel of West Texas Intermediate was last seen trading at $50.90, losing 3.85% on the day.

On the other hand, after falling to its lowest level since April 12 at 96.75 amid the disappointing ADP employment data, the US Dollar Index staged a modest rebound supported by the ISM Non-Manufacturing PMI falling in line with the market expectation. At the moment, the DXY is up 0.07% on the day at 97.19. Nevertheless, markets seem to be looking to capitalize on every opportunity to sell the greenback amid heightened odds of the Fed cutting rates in the second half of the year.

Meanwhile, the only data from Canada revealed that labour productivity in the first quarter rose by 0.3% to meet analysts' estimates but was largely ignored by the participants.

Later in the day, markets will be paying close attention to the Fed's Beige Book.

• ADP payrolls and ISM differ on employment.

Technical levels to watch for

The pair could face the initial resistance at 1.3430 (50-DMA) ahead of 1.3500 (psychological level) and 1.3525 (Jun. 3 high). On the downside, supports are located at 1.3400 (psychological level), 1.3360 (daily low) and 1.3320 (200-DMA).