USD/CAD recovers modestly to 1.2800 as oil pares early gains
- USD/CAD erased a small portion of daily losses in early American session.
- US Dollar Index stays in the negative territory on Tuesday.
- WTI trades virtually unchanged on the day near $70.60.
After rising to a fresh monthly high of 1.2896 on Monday, the USD/CAD pair reversed its direction and dropped to a daily low of 1.2740 on Tuesday. In the early American session, however, the pair staged a modest rebound and was last seen losing 0.22% on the day at 1.2795.
USD struggles to find demand as mood improves
Following a three-day drop, crude oil prices turned north on the back of improving sentiment on Tuesday and the barrel of West Texas Intermediate (WTI) rose to $71.50 area during the European trading hours before losing its bullish momentum. Currently, WTI is virtually unchanged on the day at $70.60, making it difficult for the commodity-related loonie to preserve its strength.
Nevertheless, the broad-based USD weakness is causing USD/CAD to stay in the negative territory. The US Dollar Index (DXY), which capitalized on safe-haven flows and advanced to 93.45 on Monday, was last seen posting small daily losses at 93.15.
The data from the US revealed on Tuesday that Housing Starts and Building Permits increased by 3.9% and 6%, respectively, in August but these figures failed to trigger a noticeable market reaction. On a negative note, the headline Regional Business Activity Index of the Federal Reserve Bank of Philadelphia's Nonmanufacturing Business Outlook Survey plunged to 9.6 in September from 39.1 in August.
In the meantime, Wall Street's main indexes opened modestly higher, not allowing the DXY to turn positive on the day.
Technical levels to watch for