• Crude oil falls sharply on hopes of Saudi production rapidly returning to normal.
•  Manufacturing sales in Canada declined more than expected in July.
• US Dollar Index retreats below 98.50 despite upbeat data.

The USD/CAD pair gained traction in the last hour and rose to its highest level in nearly two weeks at 1.3298 as the falling crude oil prices forced the commodity-related Loonie to weaken against its rivals. As of writing, the pair was up 0.37% on the day at 1.3283.

Citing Saudi sources familiar with the latest developments, Reuters today reported that Saudi Arabia's oil output was expected to return to normal levels in the next two-three weeks, much faster than initially expected. Crude oil prices came under heavy selling pressure and the barrel of West Texas Intermediate was last seen trading at $59.25, losing 4.15% on a daily basis.

Additionally, today's data from Canada revealed that manufacturing sales in July declined by 1.3% following June's decrease of 1.4% and fell short of the market expectation of -0.2% to further weigh on the CAD.

USD struggles to preserve its strength

On the other hand, the Greenback, which capitalized on risk-off flows on Monday, lost interest amid the recovering market sentiment and caused the pair to lose its bullish momentum.  At the moment, the US Dollar Index (DXY) was down 0.15% on the day at 98.48. Meanwhile, the data published by the Federal Reserve earlier today showed that the industrial production in the US rose 0.6% in August to surpass analysts' estimate of +0.2% but failed to help the DXY stretch higher.

Technical levels to watch for