- The USD fails to build on FOMC minutes-led positive move.
- Oil prices turn higher for the day and underpinned Loonie.
- The key focus will remain on Powell’s speech on Friday.
The USD/CAD pair quickly retreated around 25-pips over the past hour or so and slipped below the 1.3300 round figure mark, back closer to the lower end of its daily trading range.
The pair initially built on the overnight late recovery from the vicinity of mid-1.3200s - weekly lows rested in reaction to hotter-than-expected Canadian CPI report - and touched an intraday high level of 1.3315 amid a follow-through US Dollar buying, supported by Wednesday's not so dovish FOMC meeting minutes.
A modest USD pullback/pickup in Oil prices exert some pressure
The greenback, however, lacked any strong bullish conviction, rather lost the positive momentum and turned out to be one of the key factors behind the pair's sudden drop. This coupled with a pickup in Crude Oil prices further boosted the commodity-linked currency - Loonie and collaborated to the intraday pullback.
Oil prices reversed an early dip and turned higher for the day, underpinned by the overnight Energy Information Administration (EIA) report that showed a larger-than-expected drawdown in the US inventories, though concerns about a slowing global demand growth might keep a lid on any strong follow-through.
This coupled with the fact that investors might refrain from placing any aggressive bets ahead of the Fed Chair Jerome Powell's scheduled speech at Jackson Hole on Friday might further help limit the downside amid a relatively thin US economic docket - featuring the release of flash manufacturing and services PMIs.
Hence, it will be prudent to wait for a strong follow-through selling - possibly below the overnight swing lows support near mid-1.3200s - before confirming that the pair might have actually topped out in the near-term and positioning for the resumption of the prior/well-established bearish trend.
Technical levels to watch
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