- USD/CAD rose to its highest level in six weeks at 1.3346.
- US Dollar Index looks to close third straight day higher.
- Rising crude oil prices help CAD stay resilient against its rivals.
The USD/CAD pair preserved its bullish momentum after gaining more than 100 pips on Monday and touched its highest level since August 12th at 1.3346 on Tuesday. However, rising crude oil prices supported the commodity-related CAD and made it difficult for the pair to push higher. As of writing, USD/CAD was virtually unchanged on a daily basis at 1.3304.
USD strength limits USD/CAD’s losses
The barrel of West Texas Intermediate (WTI) lost more than 3% on Monday pressured by concerns over an uneven recovery in the energy demand. With the market mood turning positive on Tuesday, the WTI edged higher toward $40 and now looks to close the day in the positive territory near $39.80.
On the other hand, the broad-based USD strength continues to limit USD/CAD’s downside. The US Dollar Index, which gained 0.6% on Monday, extended its rally and rose above 94.00 for the first time since late July.
The data from the US revealed that the Philly Fed Nonmanufacturing Index improved to 8 in September from 1.6, the Richmond Fed Manufacturing Index rose to 21 from 18 and Existing Home Sales increased by 2.4% in August.
Meanwhile, US Treasury Secretary Steven Mnuchin noted that they continue to with Congress toward a phase-4 coronavirus relief package during his testimony before the House Financial Services Committee and provided a modest boost to market sentiment.
There won’t be any macroeconomic data releases from Canada on Wednesday and the US economic docket will feature the IHS Markit’s preliminary Manufacturing and Services PMI reports for September.
Technical levels to watch for
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