- Renewed trade optimism sparked a rally in Oil prices on Tuesday and underpinned Loonie.
- Further downside remained limited amid a modest USD uptick/positive US bond yields.
- Investors now eye Canadian inflation figures for some impetus ahead of the FOMC decision.
The USD/CAD pair lacked any firm directional bias and consolidated the previous session’s intraday pullback from 1-1/2 week tops.
The US President Donald Trump’s tweet, saying that he will have an extended meeting with his Chinese counterpart Xi Jinping at the June 28-29 G-20 summit in Japan, fueled optimism over a possible resolution to the prolonged US-China trade disputes.
The latest positive development triggered a fresh wave of global risk-on trade and helped Crude Oil prices to gain some strong traction, which underpinned the commodity-linked currency – Loonie and exerted some long-unwinding pressure on the major.
The pair failed to find acceptance above 100-day SMA and retreated around 55-pips intraday to finally settle near the lower end of its daily trading range, albeit a follow-through uptick in the US Dollar helped limit any further losses, at least for the time being.
Heading into Wednesday’s key event risk – the highly anticipated FOMC monetary policy decision, investors now seemed reluctant to place any aggressive bets and led to a range-bound price action through the early European trading session.
Investors on Wednesday will also confront the latest Canadian consumer inflation figures, which might influence sentiment surrounding the Canadian Dollar and produce some short-term trading opportunities ahead of the main event later during the US session.
Technical levels to watch
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