USD/CAD flirting with session lows, around 1.3280 region ahead of BoC

The USD/CAD pair edged lower through the mid-European session on Wednesday and is currently placed near the lower end of its daily trading range, around the 1.3280 region.

The pair witnessed some follow-through selling for the second consecutive session on Wednesday and retreated farther from near two-week tops set in the previous session. The prevalent bullish sentiment around oil prices, now up over 1.5% for the day, underpinned the commodity-linked currency – loonie and turned out to be one of the key factors exerting some pressure.

The downside seems limited ahead of BoC

Oil prices remained well supported by Tuesday's data, showing that US stockpiles fell more-than-expected, by 3.7 million barrels last week. This comes on the back of speculations that OPEC and its allies will extend production curbs and cut output further to support the market. The OPEC members will be meeting on Thursday and then on Friday the OPEC+ group is scheduled to meet.

Meanwhile, the intraday downtick seemed rather unaffected by a modest US dollar uptick, which managed to attract some buying in the wake of a goodish intraday pickup in the US Treasury bond yields amid positive trade-related headlines. A Bloomberg report indicated that the US and China are moving closer to agreeing on the amount of tariffs that would be rolled back in a phase-one trade deal despite tensions over Hong Kong and Xinjiang.

The pair, however, remained well within a broader trading range held over the past two weeks or so and any further downside is likely to remain limit ahead of the latest BoC monetary policy update, due later this Wednesday. In the meantime, the US economic data – ADP report on private-sector employment and ISM Non-Manufacturing PMI – will be looked upon for some short-term trading opportunities.

Technical levels to watch