USD/CAD pares early gains, returns to 1.3160 area ahead of mid-tier data

• US Dollar Index continues to fluctuate above 97.
• WTI inches higher above $60 ahead of API data.
• Manufacturing Shipments is expected to recover to 0% in Canada.

After slumping to its lowest level in more than a month at 1.3113 on Monday, the USD/CAD staged a decisive recovery and stretched higher towards the 1.3200 handle before losing its momentum. As of writing, the pair was trading at 1.3162, up 0.09% on a daily basis.

WTI pushes higher above $60

Rising oil prices seem to be helping the commodity-sensitive CAD gather strength against its rivals on Tuesday. Ahead of the American Petroleum Institue's (API) weekly crude oil inventory report, the barrel of West Texas Intermediate is trading at its highest level in three months at $60.50, adding 0.5% on the day.

Later in the session, Manufacturing Shipments data from Canada, which is expected to show no changes in October following September's 0.2% contraction, will be looked upon for fresh impetus.

On the other hand, Building Permits, Housing Starts, Industrial Production and IBD/TIPP Economic Optimism Index will be featured in the US economic docket. Following last Friday's decisive rebound, the US Dollar Index seems to be staying in a consolidation channel above the 97 handle and a stronger-than-expected reading in production data could help the greenback find demand.

Technical levels to watch for