USD/CAD stays in green above 1.31 as WTI loses nearly 2%

• Crude oil sell-off weighs on the loonie on Tuesday.
• US Dollar Index looks to close the day above 96.
• Non-manufacturing data from the U.S. disappoint.

The USD/CAD pair rose to a 4-day high of 1.3153 in the early NA session on Tuesday and has gone into a consolidation phase in the upper half of its daily range with the trading action turning subdued. As of writing, the pair was up 0.14% on a daily basis at 1.3132.

The combination of the broad-based USD strength and the heavy selling pressure surrounding crude oil provided the primary boost to the pair today. With Russian oil producer  Rosneft on Tuesday saying that it does not project any declines in Venezuela’s output in 2019, the barrel of West Texas Intermediate lost its traction and lost nearly 2% to break below the $54 mark. As of writing, the WTI was down 1.75% on the day at $53.86.

On the other hand, the US Dollar Index rose above 96 on Tuesday to recover all the losses it suffered following the FOMC announcement last week. Although today’s data from the U.S. showed that the service sector in January expanded at a weaker rate than expected, the greenback preserved its strength and the DXY remains on track to finish the day above 96.

Later in the session, markets will be paying close attention to the weekly API data from the U.S., which could be the next catalyst for the WTI.

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