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  • WTI struggles to extend its gains above $56 ahead of API data.
  • US Dollar Index stays above 98.30 despite drop in T-bond yields.
  • Coming up next: Manufacturing sales data from Canada.

After closing the previous day with a 50-pip gain at 1.3324, the USD/CAD pair posts modest gains on Tuesday as crude oil struggles to continue to recover its losses. As of writing, the pair was up 0.06% on the day at 1.3330.

Sentiment turns sour on Tuesday

Although the barrel of West Texas Intermediate on Monday rose 2.5%, the broad-based USD strength allowed the pair to preserve its bullish momentum. Comments from China on the US decision to delay the ban on Huawei showed that they were dissatisfied with the US action and caused risk-off flows to take control of the markets today.

Ahead of the weekly inventory report published by the American Petroleum Institue (API), the WTI is moving sideways near the $56 mark, making it difficult for the Loonie to show resilience.

Later in the day, markets will also be paying close attention to the manufacturing sales data from Canada, which is expected to show a decline of 1.7% on a monthly basis in June.    

Meanwhile, the US Dollar Index (DXY) is inching higher after posting daily gains for the fifth straight trading day on Monday. However, the fact that the 10-year US Treasury bond yield is erasing more than 2% on a daily basis keeps the DXY’s upside in check.

Technical levels to watch for