USD/CAD climbs higher toward 1.4050 despite rising crude oil prices
- USD/CAD looks to close higher for second straight day.
- WTI's upbeat performance helps CAD limit its losses.
- US Dollar Index rebounds toward 100 in American session.
Rising crude oil prices on Tuesday helped the commodity-related CAD outperform its rivals and caused the USD/CAD pair to drop to a daily low of 1.3970. However, the greenback gathered strength in the US afternoon and helped the pair erase its losses. As of writing, USD/CAD was up 0.2% on the day at 1.4035.
Earlier in the day, Reuters reported that OPEC+ was planning to maintain the existing oil output cuts of nearly 10 million barrels per day beyond June. With the initial reaction, the barrel of West Texas Intermediate (WTI) spiked to a five-day high of $26.84 before going into a consolidation phase ahead of API's Weekly Crude Oil Stock data. At the moment, the WTI is up 4% on a daily basis at $26.35.
Fed commentary supports USD on Tuesday
The upbeat market mood on Tuesday made it difficult for the USD to find demand during the first half of the day. The US Dollar Index fell all the way down to 99.66 but staged a rebound.
Several FOMC members made it clear that the Fed was not looking to use negative interest rates, helping the buck recover its losses. Dallas Fed President Robert Kaplan argued that the benefit of negative interest rates wouldn't outweigh the potential harm it could to the economy. Moreover, Minneapolis Fed President Kashkari noted that Fed policymakers were "pretty unanimous" in opposing the usage of negative rates.
At the moment, the US Dollar Index is staying relatively calm a little below 100, losing around 0.3% on the day.
Technical levels to watch for