USD/CAD ticks higher amid bearish Oil prices, remains below mid-1.3800s ahead of US data

The USD/CAD pair extends its sideways consolidative price move through the first half of the European session on Wednesday and remains confined in a familiar range held over the past two weeks. Spot prices currently trade around the 1.3835-1.3840 region and seem to draw support from a combination of factors.

Crude Oil prices slump to a nearly three-week low amid worries that an all-out trade war could trigger a global recession and dent fuel demand. Moreover, several members of OPEC+ reportedly will suggest an acceleration of output hikes for a second consecutive month in June. This adds to concerns over mounting supply and exerts additional downward pressure on the black liquid, which, in turn, is seen undermining the commodity-linked Loonie. Apart from this, a modest US Dollar (USD) uptick acts as a tailwind for the USD/CAD pair.

Meanwhile, the USD uptick lacks any obvious fundamental catalyst and could be attributed to some repositioning trade ahead of the key US macro data, amid the month-end flow. However, the prospects for more aggressive policy easing by the Federal Reserve (Fed), bolstered by Tuesday's disappointing US economic releases, might hold back the USD bulls from placing fresh bets. Moreover, US President Donald Trump's erratic trade policies led to a mass pivot away from US assets recently, which should cap the buck and the USD/CAD pair.

The Canadian Dollar (CAD), on the other hand, continues to draw support from the Liberal Party's win Canadian federal election, which strengthens the incumbent Prime Minister Mark Carney’s position in trade negotiations with the US. This further contributes to keeping a lid on any meaningful upside for the USD/CAD pair and warrants caution for bulls. Traders now look forward to key US macro releases – the ADP report on private-sector employment, the Advance Q1 GDP print, and the Personal Consumption and Expenditure (PCE) Price Index.

Wednesday's economic docket also features the release of the monthly Canadian GDP print, which, along with Oil price dynamics, should influence the CAD and provide some impetus to the USD/CAD pair later during the early North American session. Nevertheless, the aforementioned mixed fundamental backdrop warrants some caution before placing aggressive directional bets around the currency pair.