USD/CAD erases early losses, steadies above 1.4500
- Oil fails to capitalize on upbeat market mood.
- US Dollar Index recovers above 102 during American session.
- More than 900,000 Canadians have reportedly applied for unemployment benefits last week.
The USD/CAD pair dropped below the 1.4400 handle during the European trading hours as the USD selloff continued following the Federal Reserve's announcement of unlimited QE on Monday. However, the pair erased all of its losses in the second half of the day and was last seen trading at 1.4505, adding 0.07% on a daily basis.
The upbeat market mood as mirrored by the sharp gains witnessed in global equity indexes helped crude oil prices rise on Tuesday. The barrel of West Texas Intermediate (WTI) advanced to $25.15 but lost its traction to make it difficult for the commodity-sensitive loonie to stay strong against the greenback. As of writing, the WTI was down 0.75% on the day at $23.55.
Meanwhile, citing a source familiar with the matter, Bloomberg reported that 929,000 Canadians applied for unemployment benefits last week. When compared to 27,000 applications reported for the same time last year, this number reflects the drastic negative impact the coronavirus outbreak is having on the Canadian economy.
DXY recovers above 102
On the other hand, rising US Treasury bond yields on hopes of US finally reaching a deal on fiscal stimulus helped the USD find demand. After slumping to 101.05 earlier in the day, the US Dollar Index (DXY) reversed its direction and now looks to close above 102 with modest losses.
Moreover, the Markit Manufacturing PMI for the US fell to 49.2 in March's preliminary reading from 50.7 but beat the market expectation of 42.8 by a wide margin. However, the Composite PMI fell to its lowest level since March 2009 at 40.5 amid a sharp decline in the Services PMI.
Technical levels to watch for