USD/CAD retreats to 1.3030 area as oil rally continues
- USD/CAD is trading at its lowest level in nearly two weeks.
- Upbeat market mood continues to weigh on the USD.
- WTI extends rally into a fifth straight day on Tuesday.
The USD/CAD pair closed the first day of the week in the negative territory and extended its slide on Tuesday pressured by the rising crude oil prices and the broad-based USD weakness. As of writing, the pair, which touched its lowest level in nearly two weeks at 1.3010, was trading at 1.3032, losing 0.35% on a daily basis.
Oil rally persists on upbeat demand outlook
Revived optimism for a steady recovery in global energy demand on the back of positive coronavirus vaccine news continues to provide a boost to crude oil prices. The barrel of West Texas Intermediate gained more than 1% on Monday and is currently trading at its highest level in nearly three months at $43.52, up 1.6% on the day.
On the other hand, the positive risk sentiment remains intact on Tuesday with the major European equity indexes rising more than 1%. Additionally, the S&P 500 Futures are up 0.8%, suggesting that risk flows are likely to dominate the financial markets in the second half of the day.
Meanwhile, the greenback is having a difficult time finding demand amid risk flows and allowing the bearish pressure to remain intact. Ahead of the Conference Board's Consumer Confidence Index data, the US Dollar Index is losing 0.3% on the day at 92.22. There won't be any significant macroeconomic data releases featured in the Canadian economic docket.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
