USD/CAD extends rebound beyond 1.2750 amid negative shift in sentiment

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  • USD/CAD stages a decisive rebound after slumping to multi-year lows.
  • WTI is losing more than 1.5% on Monday.
  • US Dollar Index climbs higher toward 90.00 in American session.

The USD/CAD pair dropped to its lowest level since April 2018 at 1.2663 on Monday but reversed its course in the second half of the day. As of writing, the pair was up 0.3% on a daily basis at 1.2767.

Safe-haven flows help USD gather strength

Earlier in the day, the broad-based selling pressure surrounding the USD and rising crude oil prices forced USD/CAD to edge lower. However, a negative shift in market sentiment during the American trading hours provided a boost to the safe-haven greenback and weighed on oil.

Imminent nationwide lockdowns in Europe amid the surging number of coronavirus cases seem to be causing investors to seek refuge. Reflecting the sour market mood, major equity indexes in the US are down between around 2% and the US Dollar Index, which dropped to a multi-year low of 89.42, is now unchanged on the day at 89.90.

Meanwhile, the barrel of West Texas Intermediate (WTI) advanced to its highest level since February at $49.80 following reports suggesting that OPEC+ was not willing to ramp up the output in February. Nevertheless, resurfacing worries over a shaky recovery in energy demand dragged the WTI to $47.50, where it was down 1.6%.

The Markit Manufacturing PMI report from Canada showed on Monday that the economic activity in the country’s manufacturing sector expanded at its strongest pace in more than 10 years but the CAD failed to capitalize on this upbeat data. 

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