USD/CAD edges higher toward 1.2900 ahead of key US data

• USD/CAD is rising for the third straight day on Tuesday.
• US Dollar Index is clinging to modest daily gains above 90.00.
• WTI continues to push lower following Monday’s slump.

After rising to its highest level in three weeks at 1.2958 on Monday, the USD/CAD pair reversed its direction and erased a large portion of its daily gains to close at 1.2854. On Tuesday, the pair is trading modestly higher near 1.2880.

Oil selloff remains intact on Tuesday

The heavy selling pressure surrounding crude oil and the broad-based USD strength fueled USD/CAD upside at the start of the week. Renewed coronavirus fears amid the more transmissible new strain triggered a selloff in crude oil and the barrel of West Texas Intermediate lost more than 2% on a daily basis. At the moment, the WTI is losing 1.1% at $47.30, making it difficult for the commodity-related loonie to gather strength against its rivals.

On the other hand, the lack of progress in Brexit talks and safe-haven flows provided a boost to the greenback and allowed the US Dollar Index (DXY) to climb above 91.00. However, with major equity indexes in the US staging a decisive rebound in the second half of the session, the DXY closed with small gains a little above 90.00.

Ahead of the third-quarter Gross Domestic Product, Existing Home Sales and Richmond Fed Manufacturing Index data from the US, the DXY is up 0.16% at 90.18, helping USD/CAD stay in the green for the time being.

Investors expect the US Bureau of Economic Analysis to keep its Q3 growth data unchanged at 33.1% on a yearly basis. Meanwhile, S&P 500 Futures are virtually unchanged on the day, suggesting that risk sentiment is unlikely to provide a directional clue in the second half of the day.

Technical levels to watch for