The Canadian dollar turned higher against its major rivals in the European session on Wednesday, as oil prices rallied after industry data showed that U.S. inventories of crude fell more than analysts expected, raising hopes of a recovery in global oil demand.

Crude for September delivery rose $0.83 to $42.44 per barrel.

The American Petroleum Institute reported late Tuesday that U.S. crude stocks fell by 4 million barrels last week, beating expectations of draw of 2.9 million barrels.

The API data also showed gasoline stockpiles declined by 1.3 million barrels, while distillate inventories fell by 2.9 million barrels.

The Energy Information Administration will release its official inventory data later today.

The loonie spiked up to near a 4-week high of 0.9469 against the aussie and a 6-day high of 1.3259 against the greenback, off its early lows of 0.9515 and 1.3347, respectively. Near term resistance for the loonie is seen around 0.94 against the aussie and 1.29 against the greenback.

The loonie rallied to 80.61 versus the yen, its highest level since June 9. On the upside, 82.5 is possibly seen as the next resistance level for the loonie.

In contrast, the loonie held steady against the euro, after having fallen to 1.5656 earlier in the session. The pair had closed Tuesday's deals at 1.5613.

Data from Eurostat showed that Eurozone industrial production grew for the second straight month in June, following a marked relaxation of the coronavirus containment measures.

Industrial output grew 9.1 percent on month, slower than the 12.3 percent rise in May and the 10 percent rise economists' had forecast.

Looking ahead, U.S. monthly budget statement for July is scheduled for release in the New York session.

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