USD/CAD edges up amid bearish Oil prices, remains below mid-1.3600s ahead of Canadian CPI

The USD/CAD pair stages a modest recovery from the 1.3625 area, or over a one-month low touched during the Asian session on Tuesday and for now, seems to have snapped a two-day losing streak. Spot prices, however, remain below mid-1.3600s as traders seem reluctant to place aggressive bets ahead of the Canadian consumer inflation figures, due for release later today. 

The headline Canadian CPI is expected to fall for the second straight month and provide further evidence of slowing inflation, which may encourage the Bank of Canada (BoC) to pursue a more accommodative policy amid a slack in the labor market. This, in turn, could weigh heavily on the Canadian Dollar (CAD) and assist the USD/CAD pair to capitalize on the modest intraday recovery move. 

Ahead of the key microdata, the ongoing downfall in Crude Oil prices, fueled by optimism over the possibility of a ceasefire in Gaza, is seen undermining the commodity-linked Loonie. This, along with a modest US Dollar (USD) rebound from its lowest level since January set earlier this Tuesday, turns out to be another factor that prompts some intraday short-covering around the USD/CAD pair. 

Any meaningful upside for the Greenback, however, seems elusive in the wake of growing acceptance that the Federal Reserve (Fed) will begin its rate-cutting cycle in September. Apart from this, the upbeat market mood could further contribute to capping gains for the buck, warranting some caution before confirming that the USD/CAD pair has formed a near-term bottom ahead of the 1.3600 mark.

Traders might also prefer to wait for more cues about the Fed's rate-cut path before positioning or the next leg of a direction. Hence, the market attention will then shift to the release of the July FOMC meeting minutes, due on Wednesday. This, along with Fed Chair Jerome Powell's speech at the Jackson Hole Symposium, will influence the USD and provide some meaningful impetus to the USD/CAD pair.