Despite falling oil prices, USD/CAD holds gains over 1.3400 as it waits for US data and FOMC comments.

Market Analytics and Technical Considerations

On Wednesday, the USD/CAD picks up some bids and partially recoups its nighttime losses.

A new leg downward in price of oil hurts the Canadian dollar and keeps the move in support.

Speculation on the Fed raising rates less aggressively weigh on the USD and could limit gains for the pair.

In order to gain momentum before the crucial FOMC minutes, traders are now turning to the US macro data.

The USD/CAD pair rallies from its previous Wednesday’s weekly low and attracts some buying near the 1.3360-1.3355 area. During the early North American session, the pair reaches a new daily high near the 1.3425 area and appears to have halted this week’s correction from the 1.3500 psychological mark for the time being.

The commodity-linked CAD is likely to be undermined by a fresh leg down in crude oil prices, but the USD/CAD pair is likely to benefit from this .The black liquid is being weighed down by concerns that a new COVID-19 outbreak in China will impede fuel demand and an upcoming price cap on Russian oil by the Group of Seven (G7) nations .Additionally, the Organization for Economic Cooperation and Development (OECD) anticipates a slowdown in global economic expansion in the coming year, putting additional pressure on the price of crude oil.

On the other hand, despite the growing consensus that the Fed will slow the pace of its policy tightening, the US dollar has remained depressed for the second consecutive day. In point of fact, at the moment, the markets are pricing in a higher likelihood of a relatively minor 50 bps Fed rate hike in December. The safe-haven greenback is also weighed down by the steady performance of the equity markets .Since the market is still focused on the FOMC meeting minutes, this could limit any further gains for the USD/CAD pair.

Investors will look for clues about the Fed’s policy outlook and the path it will take to raise rates in the future. This will have a significant impact on the USD price dynamics in the near future and give the USD/CAD pair a new direction. The US economic docket, which includes data on durable goods orders, weekly initial jobless claims, flash PMIs, and new home sales, may provide short-term trading opportunities as the key event risk approaches.

Key Technical levels to look at

CAD/USD