- WTI drops below $33 after touching a daily high of $34.57.
- US Dollar Index clings to daily recovery gains, stays below 96.
- 10-year US Treasury bond yield retraces large portion of Tuesday’s rally.
The USD/CAD pair gained traction in the last hour and broke above the 1.3700 mark after spending the first half of the day fluctuating around the 1.3650 region. As of writing, the pair was up 0.33% on the day at 1.3745.
Risk rally loses steam
The market sentiment seems to be turning sour during the American session as investors start to lose hope that the Trump administration will soon deliver an economic response package to counter the impact of coronavirus on the economic activity.
Wall Street’s main indexes, which started the day more than 3% higher, erased a large portion of early gains and were last up around 1% to reflect the negative shift in the market mood. Additionally, the 10-year US Treasury bond yield retraced the majority of the daily rally in the last hour.
With risk-off flows starting to dominate the markets, the barrel of West Texas Intermediate (WTI) struggled to extend its rebound and returned below the $33 handle to make it difficult for the CAD to stay resilient against the USD.
On the other hand, the US Dollar Index seems to have steadied below the 96 handle to help the pair preserve its bullish momentum.
There won’t be any macroeconomic data releases from the US in the remainder of the day and investors will be paying close attention to the US Coronavirus Task Force’s press conference at 21:30 GMT.
Technical levels to watch for