- USD/CAD edges higher on the back of a modest USD uptick, weaker oil prices.
- The upside remains limited ahead of the highly anticipated FOMC policy update.
The USD/CAD pair edged higher during the Asian session on Wednesday, albeit lacked any strong follow-through and remained capped below mid-1.3200s.
A combination of factors – a modest pickup in the US dollar demand and sliding oil prices –assisted the pair to gain some positive traction on Wednesday and snap two consecutive days of losing streak.
Bulls remain on the sidelines ahead of FOMC
The greenback rose on the back of reports, indicating that the US might delay a planned tariff on around $156 billion worth Chinese products before the December 15 deadline, but the gains were limited.
However, the US President Donald Trump’s top economic advisor Larry Kudlow’s comments, saying that he could not confirm that additional tariffs on China would be delayed kept a lid on the USD uptick.
Apart from the USD price dynamics, bulls further took cues from a modest pullback in oil prices, down around 0.60% for the day, which undermined demand for the commodity-linked currency – loonie.
Oil prices lost some ground on Wednesday in reaction to the overnight report by the American Petroleum Institute (API), showing that US stockpiles rose by 1.41 million for the week ended December 6.
Meanwhile, bulls lacked any strong conviction, rather preferred to stay on the sidelines ahead of the key event risk – the highly anticipated FOMC decision due later during the US session on Wednesday.
In the meantime, the latest US consumer inflation figures for November, though is likely to be overshadowed by the pre-Fed repositioning trade, will be looked upon for short-term trading impetus.
Technical levels to watch