USD/CAD trims losses but remains capped below 1.3735

• The Canadian Dollar is pulling back amid a firmer USD, but remains close to YTD highs.
• Upbeat comments from the White House are fuelling hopes of a positive outcome of the US-China meeting.
• Oil prices' rally is supporting the Canadian Dollar.

The Canadian Dollar is losing ground for the third consecutive day, with its US counterpart favoured by a moderate optimism about the outcome of the Sino-US trade talks. The pair, however, is struggling to post a significant distance from the 1.3640 year-to-date high reached last week.

The Greenback is showing a mild bullish tone on Tuesday, buoyed by the positive comments by US President Trump regarding the US-China trade talks as representatives from the world's two major economies meet for a second day, aiming to normalise their trade relationships.

Both countries hac¡ve expressed their will to find a way to reduce reciprocal tariffs that are starting to bite into their respective economies. That, however, will involve concessions in controversial aspects such as rare earths' trade, restrictions on exports of semiconductors or student visas, which might require time and effort.

Negotiators from the world's two major economies are trying to ease the recent trade tensions and get back on the track defined last month in Geneva. Those talks led to a significant reduction of their reciprocal tariffs, which was celebrated by the market. The mood is mildly positive today, yet traders are growing cautious about the US Dollar.

In the absence of relevant economic releases from the US or Canada, the steady increase in Oil prices, Canada's main export, is providing some support to the CAD, keeping the pair from rallying further.