USD/CAD clings to small gains near 1.3230 as DXY extends recovery ahead of Powell

• Crude oil recovery loses momentum on Thursday.
• US Dollar Index advances to 95.40 area.
• Building permits rise more than expected in Canada.

The USD/CAD pair, which closed the previous six days in the negative territory, is clinging to modest gains on Thursday as the greenback continues to correct yesterday’s sharp fall. As of writing, the pair was up 0.15% on the day at 1.3235.

Earlier today, the data published by Statistics Canada revealed that building permits in Canada increased by 2.6% on a monthly basis in November to surpass the market expectation for a 0.5% decline. However, the commodity-sensitive loonie failed to take advantage of this data as the barrel of West Texas Intermediate lost its bullish momentum and now looks to snap its 7-day winning streak.

On the other hand, despite the dovish tone seen in the FOMC’s December meeting minutes and cautious remarks from Fed officials, the greenback was able to stage a rebound to help the pair preserve its daily gains. Ahead of FOMC Chairman Powell’s speech later in the session, the DXY is staying calm near the 95.40 level.

With no other data from Canada left in the remainder of the week, the greenback’s market valuation is likely to remain as the sole driver of the pair’s price action. Tomorrow, December inflation data from the U.S. will be watched closely by the market participants.

Previewing the data, “Inflation at or near the 2% target and 3% economic growth gives the Fed leeway on rates. The minutes of the December 18-19^th  FOMC released on Wednesday noted that many participants thought that the bank could afford patience on rates and that future policy should be guided by incoming data,” said FXStreet senior Analyst Joseph Trevisani.

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