- USD / CAD lost its traction after climbing above 1.2800 on Tuesday.
- The US Dollar Index consolidates daily gains around 93.00.
- The positive change in risk sentiment is helping crude oil rebound.
The pair USD / CAD it extended its rally and advanced beyond 1.2800 for the first time in five months. However, with the flows of risk appetite beginning to dominate the financial markets in the second half of the day, the pair reversed its direction and was last seen losing 0.25% at 1.2715.
DXY rally loses steam as US equities rebound
Earlier in the day, broad-based USD strength allowed USD / CAD to remain bullish following Monday’s rally. The US Dollar Index (DXY) reached its highest level since the beginning of April at 93.17 during European trading hours and helped the pair to rise.
On the other hand, a barrel of West Texas Intermediate (WTI), which lost almost 7% on Monday, struggled to erase its losses and made it difficult for the commodity-related Canadian dollar to show resistance against its US counterpart.
The decisive recovery seen in the major Wall Street indices forced the USD / CAD to fall in the US session, as the USD as a safe haven lost its appeal and the WTI turned north. Currently, the S&P 500 is up 1.5% on the day and the WTI is up 0.67% at $ 67.
The only data from the US on Tuesday showed that new homes were up 6.3% monthly in June. However, investors paid little or no attention to this report. There will be no high-level data releases on the US economic docket on Wednesday and risk perception is likely to continue to affect the currency’s valuation.