USD/CAD pares early losses, inches closer to 1.3600

• USD/CAD found support below 1.3550 and staged a rebound.
• US Dollar Index is staying in the positive territory above 97.50.
• WTI posts small daily gains near $40 ahead of EIA data.

The USD/CAD pair dropped to a daily low of 1.3543 during the early trading hours of the European session but staged a decisive rebound. As of writing, the pair was up 0.12% on a daily basis at 1.3590.

DXY edges higher ahead of key US data

The dismal market mood, as reflected by the heavy selling pressure surrounding major European equity indexes, is helping the greenback find demand on Wednesday. The US Dollar Index (DXY), which tracks the USD’s performance against a basket of six major currencies, is up 0.18% on the day at 97.56.

In the second half of the day, the ADP’s monthly Employment Change data and the ISM’s Manufacturing PMI will be watched closely by the market participants. Later in the session, the FOMC will release the minutes of its June meeting.

Previewing the potential impact of the ADP report, “a stronger than forecast ADP report will allay some of the economic fear behind the rising viral incidence,” said FXStreet analyst Joseph Trevisani. “Equities would certainly benefit from any signs of an improving labor economy, but oddly enough the dollar might not.” 

Meanwhile, crude oil is staying relatively resilient despite the risk-averse market environment and helping the CAD limit its losses. The barrel of West Texas Intermediate is currently up 0.4% on the day near $40, waiting for the US Energy Information Administration’s (EIA) weekly Crude Oil Stocks Change data. 

Technical levels to watch for