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USD/CAD clings to gains above mid-1.3300s, shrug off bullish oil prices

   •  A modest USD uptick helped regain some positive traction on Tuesday.
   •  Bullish oil prices do little to underpin Loonie/attract some fresh selling.
   •  Traders seemed reluctant to place bets ahead of Wednesday’s BoC meeting.

The USD/CAD pair regained positive traction on Tuesday and recovered a major part of the previous session's sharp intraday downfall. 

The commodity-linked currency - Loonie was among the strongest ones at the start of a new trading week and was underpinned by a fresh leg of an upsurge in crude oil prices, supported by news that the US plans to halt waivers for countries that import Iranian oil.

Having repeatedly failed to build on its momentum beyond the 1.3400 handle, the pair witnessed a modest pullback at the start of a new trading week, though lacked any strong bearish follow-through on Tuesday amid a modest US Dollar uptick. 

The move clearly underscores investors' reluctance to place any aggressive bets ahead of the latest BoC monetary policy update on Wednesday, where the central bank may again strike a more cautious tone amid the recent softness in the domestic economy.

This coupled with important US macro data, including the advance US GDP report on Friday, would play an important role in determining the pair's next leg of a directional move. Hence, it would be prudent to wait for a sustained move in either direction before positioning for the near-term trajectory.

In the meantime, the USD/oil price dynamics might continue to act as key determinants of the pair's momentum through Tuesday's trading session amid absent relevant market moving economic releases, either from the US or Canada.

Technical levels to watch


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