- Fears over USD shortage is pushing DXY higher on Tuesday.
- WTI posts small recovery gains, trades below $30.
- Coming up: Manufacturing Sales from Canada, Retail Sales from US.
After breaking above the 1.4000 handle during the European session on Tuesday, the USD/CAD pair extended its rally and rose to its highest level since January 2016 at 1.4135. As of writing, the pair was trading a couple of pips below that peak, adding 0.85% on a daily basis.
DXY breaks above 99
The broad-based USD strength amid heightened fears over funding stress seems to have become the main market theme. The US Dollar Index, which tracks the greenback’s performance against a basket of six major currencies, was last up 1.22% on the day at 99.20.
According to Reuters, excessive US swap prices show that the US dollar funding situation continues to worsen with overnight (T/N) EUR/USD swap surging to 10% vs 0.15% on a regular day.
On the other hand, the barrel of West Texas Intermediate struggles to stage a meaningful recovery and continues to trade near the $29 mark to make it difficult for the commodity-related loonie to show resilience against the buck.
In the second half of the day, the Manufacturing Sales data from Canada and the Retail Sales and Industrial Production data from the US will be featured in the economic docket.
Technical levels to watch for
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