The loonie remained stable Tuesday despite a tumble in oil prices and reported some gains after the Canadian and u.s. bond yield spreads narrowed due to the softness of the USD which was being sold off in exchange for investors looking for safety and moving into the EUR, CHF and JPY. The CAD advanced on the USD despite the heavy link shown earlier this year between the price of crude and the loonie.

Fed Meeting Tomorrow

Investors are looking towards tomorrow's Federal Reserve meeting and the announcement by Chair Janet Yellen about a March interest rate hike. The decision to implement a hike or not could determine the fate of the USD. The Fed had forecasted 4 rate hikes in 2016, but that was before market conditions deteriorated in January.

A strong market sell-off in Asia and the drastic drop in the price of energy have put a double whammy on the Canadian dollar. During the last week the CAD had shown some signs of not following every move of energy with the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members hinting at the idea of a production agreement. But this seems highly unlikely at the moment.

The USD depreciated 0.356 percent versus the CAD in the last 24 hours. The U.S. dollar has trailed against the majors and has had only a few gains against non-Asian emerging markets. Rumors of an internal crisis at Deutsche Bank have investors concerned and triggered a sell off of riskier assets in the search for safety.

Deutsche Bank (DB) has announced that it considering buying back several billion euros of its debt, as it takes steps to strengthen the tumbling value of its securities against the backdrop of a broader flight of financial stocks.