• USD/CAD continues its mild correction as higher oil prices strengthen the Canadian Dollar.
• OPEC Ghais is upbeat on oil demand for this year.
• The US Dollar prints a fresh three-month high amid a risk-off mood.

The USD/CAD pair falls slightly below 1.3550 in the late European session on Wednesday as upbeat oil prices have strengthened the Canadian Dollar. The Loonie asset continues to correct despite the US Dollar extending its upside.

The positive commentary on the oil outlook from OPEC Secretary General Al Ghais has strengthened the oil price bulls. On Tuesday, General Al Ghais said he expects a strong global economy this year with positive implications for demand. He added, “Saudi Arabia's decision to postpone capacity expansion should not be misunderstood as poor demand outlook.”

It is worth noting that Canada is the leading oil exporter to the United States, and higher oil prices support the Canadian Dollar.

The overall market mood is downbeat as persistent United States inflation data has cooled down expectations of rate cuts by the Federal Reserve (Fed) in the May monetary policy meeting. Fed policymakers are expected to keep interest rates in the range of 5.25-5.50% until they get confidence that inflation will sustainably return to the 2% target. The overall inflation picture indicates that the last leg of high price pressures is complicated.

The US Dollar Index (DXY) refreshes a three-month high to near 105.00. The US Dollar attracts more foreign inflows when the Fed maintains a hawkish rhetoric.

Going forward, market participants will focus on the monthly US Retail Sales data for January, which will be published on Thursday. Investors anticipate that Retail Sales contracted by 0.1% against a 0.6% increase in December