USD/CAD steadies around 1.3000 ahead of PMI data

• USD/CAD fell to its lowest level since January on Tuesday.
• WTI holds on to modest gains near $43.
• Manufacturing PMI data from Canada and the US will be watched closely.

After closing the fifth straight trading day in the negative territory, the USD/CAD pair extended its slide on Tuesday and touched its lowest level since January at 1.2993 before erasing a small portion of its daily losses. As of writing, the pair was trading a little below 1.3000, losing 0.35% on a daily basis.

The unabated selling pressure surrounding the greenback remains as the main market theme since the Federal Reserve's decision to target average inflation as its new strategy last week. The US Dollar Index (DXY) closed the first day of the week in the negative territory and slumped to its lowest level since May of 2018 at 91.75 on Tuesday. As of writing, the DXY was down 0.38% on the day at 91.82.

Focus shifts to PMI data

Later in the day, the IHS Markit will release the August Manufacturing PMI data for both the United States and Canada. Moreover, the ISM Manufacturing PMI from the US will be watched closely by the market participants.

Investors expect to see a slowdown in the pace of expansion in the Canadian manufacturing sector's economic activity. If the PMI comes in below 50 and reveals a contraction, the CAD could find it difficult to stay resilient against the USD.

Meanwhile, the barrel of West Texas Intermediate (WTI) is posting modest daily gains around $43 on Tuesday, helping the commodity-related loonie preserve its strength against its major rivals. 

Technical levels to watch for