• USD/CAD struggles to recover on Tuesday.
  • Crude oil prices rise further extending Monday’s gains.
  • US Dollar Index struggling around 93.00.

USD/CAD declined to an almost 2 year low at 1.2928 on Monday amid surging crude oil prices, which offered a strong lift to the commodity-sensitive CAD. The downward pressure appeared to have eased on Tuesday, although the pair struggles to stage a convincing rebound.  USD/CAD trades +0.08% at 1.3018.

CAD capitalizes on oil’s rally

The announcement from Pfizer that its covid vaccine was found to be more-than-90% effective in phase-three trials renewed optimism surrounding a recovery in global energy demand, helping crude oil prices book impressive gains.  West Texas Intermediate rallied over 6% on Monday and trades +2% on the day at $40.60.

Meanwhile, risk flows moved US Treasury bond yields sharply higher at the start of the week supporting USD. The US Dollar Index (DXY) pared most of last week’s losses on Monday, rallying 0.65%. A lack of significant fundamental drivers means DXY is trading quietly around 92.80 ahead of the US session.

September JOLTS Job Openings is the only release on the US economic calendar Crude oil’s performance is likely to continue driving the pair’s movements in the near-term.