USD/CAD consolidates in a range below mid-1.3900s, Canadian CPI/FOMC minutes awaited

• USD/CAD struggled for a firm direction and remained confined in a range on Wednesday.
• Bulls shrugged off a modest pickup in the USD demand and subdued crude oil price action.
• Investors now look forward to Canadian CPI, FOMC meeting minutes for a fresh impetus.

The USD/CAD pair lacked any firm directional bias and seesawed between tepid gains/minor losses through the early European session on Wednesday. The pair was last seen trading below mid-1.3900s, well above three-week lows set on Tuesday.

Reports that the US drugmaker Moderna had provided insufficient data to determine the vaccine’s efficacy casted doubts on a potential vaccine for the deadly virus. This, in turn, forced investors to take refuge in the safe-haven US dollar and prompted some short-covering move around the USD/CAD pair.

Meanwhile, a subdued action around crude oil prices did little to influence demand for the commodity-linked loonie, albeit remained supportive of the pair’s overnight recovery of around 100 pips. Bulls struggled to capitalize on the momentum and seemed unimpressed by a modest pickup in the USD demand.

Meanwhile, a strong rally in the US equity futures, coupled with sliding US Treasury bond yields kept a lid on any strong USD positive move. This seemed to be the only factor holding investors from placing any bullish bets and failed to assist the USD/CAD pair to gain any meaningful traction.

Moving ahead, market participants now look forward to Wednesday’s economic docket, highlighting the release of Canadian consumer inflation figures. This will be followed by the release of the minutes of the latest FOMC meeting, which might produce some short-term trading opportunities.

Technical levels to watch