USD/CAD climbs to fresh daily highs near 1.3330 on crude oil sell-off

• Crude oil prices fall sharply on Tuesday to weigh on the CAD.
• Concerns over the United States (US) and China failing to reach a deal hurt the sentiment.
• US Dollar Index continues to fluctuate below the 99 handle.

The USD/CAD pair gained traction on Tuesday as the heavy selling pressure surrounding crude oil makes it difficult for the commodity-related Loonie to find demand. As of writing, the pair was trading at 1.3323, adding 0.12% on a daily basis.

Focus remains on trade headlines

Ahead of the high-level United States (US)-China trade negotiations later this week, the Chinese Foreign Ministry said in a statement that it is preparing to retaliate to the US’ backlisting of the Chinese firms. Furthermore, South China Morning Post (SCMP) today reported that the Chinese delegation was expected to leave Washington earlier than planned.

Resurfacing fears of the negative impact of a protracted US-China trade conflict on the global energy demand outlook put crude oil prices under pressure on Tuesday. The barrel of West Texas Intermediate (WTI) was last seen trading at $51.90, losing 1.6% on a daily basis.

On the other hand, the 10-year US Treasury bond yield is erasing more than 2.5% amid the risk-off flows and forces the US Dollar Index to stay below the 99 handle. Later in the day, Producer Price Index (PPI), IBD/TIPP Economic Optimism Index data from the US will be looked upon for fresh impetus. Additionally, Federal Open Market Committee Chairman Jerome Powell and Chicago Fed President Evans will be delivering speeches in the US evening. The only data featured in the Canadian economic docket will be the Building Permits, which is likely to be ignored by the market participants.

Technical levels to watch for