USD/CAD moves little post-Canadian CPI, FOMC minutes awaited

• USD/CAD remained depressed for the third consecutive session on Wednesday.
• A modest USD bounce, weaker crude oil prices helped limit any further losses.
• The focus remains firmly on the upcoming release of the latest FOMC minutes.

The USD/CAD pair maintained its offered tone through the early North American session and had a rather muted reaction to the Canadian CPI figures.

The pair extended its recent bearish trend and continued losing ground for the third consecutive session on Wednesday. The downward also marked the seventh day of a negative move in the previous eight and was exclusively sponsored by some early weakness around the US dollar.

The impasse over the next round of the US fiscal stimulus measures, concerns about the US economic recovery and the ongoing downfall in the US Treasury bond yields continued weighing on the greenback. This, in turn, was seen as one of the key factors exerting pressure on the USD/CAD pair.

However, some repositioning trade ahead of Wednesday’s release of the latest FOMC meeting minutes prompted some intraday USD short-covering bounce from the lowest level since April 2018. This, coupled with a modest fall in oil prices undermined the loonie and extended some support to the major.

On the economic data front, the Canadian consumer inflation fell short of market expectations but failed to provide any meaningful impetus to the USD/CAD pair. According to Statistics Canada, the headline CPI rose 0.1% YoY in July as against 0.5% expected and 0.7% rise recorded in June.

Traders, however, largely shrugged off Wednesday’s important macro data as the focus remains firmly glued to the FOMC minutes. Investors will look for details about the possible strategies Fed officials are discussing to enhance forward guidance, which will influence the near-term USD price dynamics.

Technical levels to watch