USD/CAD erases more than 200 pips from daily highs, holds near 1.4100
|- Month-end flows ramp up the volatility in American session.
- US Dollar Index clings to modest daily gains above 99.
- WTI trades below $21 ahead of API data.
The USD/CAD pair fluctuated in a wide channel during the American trading hours on Tuesday as month-end flows boosted the market volatility. After climbing all the way up to 1.4350, the pair fell sharply and touched a session low of 1.4070 in the last hour. As of writing, the pair was trading at 1.4115, erasing 0.38% on a daily basis. In the month of March, the pair remains on track to close more than 5% higher.
Crude oil's massive decline in March
Throughout March, falling crude oil prices amid the price was in the market and the dismal energy demand outlook due to the coronavirus outbreak weighed on the commodity-sensitive CAD. The barrel of West Texas Intermediate (WTI) remains on track to register its lowest monthly close since 2002 with a loss of nearly 55%.
Nevertheless, the WTI is posting small recovery gains on Tuesday at $20.40 and helping the loonie stay strong against its rivals. Later in the session, the American Petroleum Institute's Weekly Crude Oil Stock Report will be looked upon for fresh impetus.
Reflecting the heightened market volatility, the US Dollar Index (DXY) fell to 99 from 99.95 but quickly recovered above 99.50 before, once again, losing its traction. At the moment, the DXY is up 0.1% on the day at 99.15.
Earlier in the day, the Conference Board's Consumer Confidence Index in the US dropped to 120 in March from 132.6 but came in better than analysts' estimate of 110. On the other hand, Statistics Canada reported that the Canadian economy expanded by 0.1% on a monthly basis in January as expected.
Commenting on the data, "January numbers are ancient history now given how the economic landscape has drastically shifted. Even so, today's number will help fine tune Q1 GDP forecasts," said Benjamin Reitzes from BMO. "With the virus-mitigation measures almost certainly continuing through April, Q2 is going to get hit much, much harder.”
Technical levels to watch for
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.