USD/CAD consolidates daily gains, looks to close above 1.2300
|- Broad-based USD strength helped USD/CAD push higher on Tuesday.
- Rising crude oil prices limit USD/CAD's upside for the time being.
- Canada posted a trade deficit of C$1.1 billion in March.
The USD/CAD pair broke above 1.2300 on Tuesday and reached its highest level in nearly a week at 1.2350 before going into a consolidation phase. As of writing, the pair was up 0.26% on the day at 1.2308.
DXY steadies above 91.00
Following Monday's sharp drop, the US Dollar Index (DXY) managed to reverse its direction as the greenback capitalized on safe-haven flows. With Wall Street's main indexes opening deep in the red, the DXY reached its highest level since April 22 at 91.40.
The US Census Bureau reported on Tuesday that Factory Orders increase by 1.1% in March, compared to analysts' estimate of 1.3%.
Meanwhile, the data published by Statistics Canada revealed that Canada registered an international merchandise trade deficit of C$1.1 billion in March. This reading came in worse than the market expectation for a surplus of C$0.7 billion and allowed USD/CAD's bullish momentum to remain intact.
On the other hand, crude oil prices continued to rise amid the improving energy demand outlook. The barrel of West Texas Intermediate (WTI) is currently trading at its highest level since mid-March at $65.70, gaining nearly 2% on the day and helping the commodity-related loonie limit its losses.
There won't be any macroeconomic data releases featured in the Canadian economic docket on Wednesday. Investors will be paying close attention to ADP Employment Change and ISM Services PMI data from the US.
Technical levels to watch for
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