USD/CAD pares early losses on oil drop, trades around 1.2060
- USD/CAD is edging higher during the American session.
- WTI turned south after testing $67, loses nearly 1% below $66.
- US Dollar Index stays in the negative territory below 90.00.
After dropping to its lowest level in six years at 1.2011 earlier in the day, the USD/CAD pair managed to stage a recovery and was last seen trading flat on the day at 1.2062.
WTI drops below $66 following earlier rally
Crude oil prices built on Monday's gains and the barrel of West Texas Intermediate (WTI) reached its strongest level since early March at $67.00 on Tuesday, helping the commodity-sensitive CAD outperform its rivals. With WTI reversing its direction and losing nearly 1% below $66, the loonie lost interest and allowed USD/CAD to erase its losses.
On the other hand, the greenback remains on the back foot with the US Dollar Index losing 0.4% at 89.83 at the time of press. Nevertheless, the modest rebound witnessed in the benchmark 10-year US Treasury bond yield seems to be helping the USD limit its losses. Additionally, Wall Street's main indexes trade mixed after the opening bell, making it difficult for risk flows to continue to dominate the financial markets.
The only data from the US revealed on Tuesday that Housing Starts declined by 9.5% in April and Building Permits rose by 0.3%. These figures failed to trigger a meaningful market reaction. There won't be any other data releases in the remainder of the day and the pair is likely to continue to react to changes in crude oil prices.
Technical levels to watch for