The Canadian dollar has steadied slightly against the US dollar early on Tuesday, buoyed by an improvement in crude oil prices and a weakness in the greenback. At the time of writing, USD/CAD is trading at around 1.329.

In the previous session, the Canadian Dollar lost as much as 0.5% of its value against the US dollar as markets increased the likelihood for potential rate cuts by the Bank of Canada. The prolonged weakness in crude oil prices is expected to weigh heavily on the Canadian economy which is highly dependent on oil exports.

Presently markets are anticipating 30% likelihood of a rate cut by the BOC, up from around 10% less than a week ago. Further weakness in the CAD was driven after Canadian bond yields edged lower on Monday.

Even though Canada’s wholesale trade beat expectations and posted a 0.9% gain in November, markets remained more focused on the rise in coronavirus cases around the world, driving weakness in crude oil prices. Economists had forecast a 0.5% gain for the period, but higher sales of motor vehicles, vehicle parts and accessories helped boost wholesale trade.