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USD/CAD retreats to 1.4200 area as DXY rally loses steam

  • US Dollar Index pulls away from highs, holds above 100.
  • Retail Sales in Canada rose more than expected in February.
  • US second-month crude oil futures are down more than 35%. 

The USD/CAD pair rose to its highest level in more than two weeks at 1.4266 on Tuesday but struggled to push higher as the greenback lost its strength during the American session. As of writing, the pair was trading at 1.4105, still up 0.4% on a daily basis.

The risk-off atmosphere on Tuesday helped the USD find demand as a safe-haven and helped the US Dollar Index rose to its highest level since April 7 at 100.48. Although the index lost its traction in the second half of the day, it clings to modest daily gains near 100.20 as Wall Street’s main indexes trade deep in the negative territory.

Crude oil selloff continues

On the other hand, collapsing crude oil prices make it difficult for the commodity-sensitive loonie to recover its losses. After the front-month WTI contract dropped below $0 for the first time ever on Monday, the second-month crude oil futures continued to fall on Tuesday and were last seen down more than 35% on a daily basis.

Earlier in the day, the data published by Statistics Canada showed that Retail Sales in February increased by 0.3% on a monthly basis to beat the market expectation of 0.2% but was largely ignored by market participants. Meanwhile, the Federal Reserve Bank of Philadelphia’s Nonmanufacturing Index slumped to a record low of -96.4 in April.

Technical levels to watch for

 

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