USD/CAD lacks firm intraday direction, oscillates in a range around 1.3400 mark
|- USD/CAD attracts some dip-buying on Monday and is supported by a combination of factors.
- Retreating Oil prices undermine the Loonie and lend support amid a modest USD strength.
- Bets for smaller Fed rate hikes cap the USD recovery and act as a headwind for the major.
The USD/CAD pair seesaws between tepid gains/minor losses heading into the North American session and is currently trading around the 1.3400 mark, nearly unchanged for the day.
A combination of supporting factors assisted the USD/CAD pair to attract some buyers near the 1.3350 area, though the intraday uptick is seen runing out of steam near the 1.3420 region. A modest pullback in Crude Oil prices undermines the commodity-linked Loonie and lends support to spot prices. Apart from this, a softer risk tone drives haven flows towards the US Dollar and acts as a tailwind for the major.
The attempted USD recovery from a seven-month low, meanwhile, remains capped in the wake of rising bets for a less aggressive policy tightening by the Fed. In fact, the markets now seem convinced that the US central bank will soften its hawkish stance amid signs of easing inflationary pressure. Furthermore, several FOMC members last week backed the case for a smaller 25 bps rate hike in February.
Given that the US markets are closed in observance of Martin Luther King Jr. Day, the aforementioned mixed fundamental backdrop holds back traders from placing aggressive bets around the USD/CAD pair. Traders also seem reluctant ahead of the release of Canadian consumer inflation data on Tuesday, which will be followed by the Producer Price Index and Retail Sales figures from the US on Wednesday.
In the meantime, traders on Monday will take cues from Oil price dynamics. Apart from this, the Bank of Canada's Business Outlook Survey report might influence the Canadian Dollar and contribute to producing short-term opportunities around the USD/CAD pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.