USD/CAD extends slide, drops below 1.4030 as WTI climbs to two-month highs

• USD/CAD starts new week under pressure on rising crude oil prices.
• China is oil demand is reportedly already close to pre-virus levels. 
• Risk-on market environment weighs on USD on Monday.

The USD/CAD pair came under renewed bearish pressure on Monday with the commodity-sensitive loonie gathering strength on rising crude oil prices. After dropping to a daily low of 1.4023, the pair recovered slightly and was last seen trading at 1.4035, losing 0.52% on the day.

Oil rally picks up steam

According to Bloomberg, China’s oil consumption at 13 million barrels per day currently is already near levels reported around the same time last year. Boosted by this development, the barrel of West Texas Intermediate (WTI) rose to its highest level since March 16th at $32.21. At the moment, the WTI is up 7.4% on the day at $32.

On the other hand, the upbeat market mood as mirrored by the sharp upsurge witnessed in global equity indexes is weighing on the safe-haven USD on Monday. The US Dollar Index, which edged higher toward 100.50 earlier in the day, is now losing 0.2% on the day at 100.15, allowing the bearish momentum to remain intact.

On Monday, White House economic adviser Hassett told CNBC that the administration was ready to take more action to ramp up coronavirus spending. The US economic docket won’t be featuring any significant macroeconomic data releases in the remainder of the day and crude oil’s action is likely to continue to dominate USD/CAD’s movements.

Technical levels to watch for