USD/CAD struggles to find direction, trades in tight range near mid-1.32s

• WTI recovers Monday’s losses, trades above $53.
• Consumer sentiment deteriorates in the U.S. in January.
• US Dollar Index clings to small gains in the early NA session.

After closing the day modestly higher on Monday, the USD/CAD pair failed to build on its recent gains and started to fluctuate in a tight 30-pip range on Tuesday. As of writing, the pair was virtually unchanged on the day at 1.3262.

Although the decisive rebound witnessed in the WTI, which lost 2.7% on Monday, seems to be helping the commodity-sensitive find demand on Tuesday, stronger greenback in the NA session caps any potential gains for the time being.  

Following a drop to a two-week low of 95.62 earlier in the day, the US Dollar Index rose above 95.80 in the last hour. However, the fact that 10-year T-bond yield is losing nearly 1% on the day suggests that the greenback’s recovery is technical in nature and is unlikely to last.  

In its monthly report on Tuesday, the Consumer Board reported that the Consumer Confidence Index in January edged down to 120.2 from 126.6 in December. Commenting on the details of the report, “The Present Situation Index was virtually unchanged, suggesting economic conditions remain favorable. Expectations, however, declined sharply as financial market volatility and the government shutdown appear to have impacted consumers,” said    Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

There won’t be any macroeconomic data releases from Canada on Wednesday and investors are likely to stay on the sidelines ahead of tomorrow’s key FOMC announcements.  

Technical levels