USD/CAD trades a tad below 1.2400 ahead of BOC rate decision

• USD/CAD makes a sluggish move on Wednesday ahead of a key BOC decision.
• WTI retreats from higher levels, exerting pressure on the prospects of the loonie.
• The greenback remains grounded amid upbeat housing and consumer sentiment data.

USD/CAD trades cautiously on Wednesday in the early European trading hours. The pair recovered from the intraday’s low of 1.2350 in the US session and confided in a very narrow trade band. At the time of writing, USD/CAD is trading at 1.2389, down 0.01% for the day.

The US Dollar Index (DXY), trades at 93.90 ahead of the market volatility amidst the major central banks' meetings. Investors anticipate Fed’s tapering while digesting delay in rate hike expectations. US corporate results remained strong despite inflation concerns, which helped the greenback in finding some traction.

The US New Home Sales soared 14% in September whereas the Consumer Confidence jumped to 113.8 in October from 109.8 in September.

The loonie took a back seat following a retreat in WTI prices and ahead of the critical Bank of Canada's (BOC) policy meeting later in the day. Investors anticipate that the BOC will hike the cash rate, as the Canadian economy faces rising inflation and a tightening labor market. Both conditions put an ideal scenario for the central bank to start increasing rates sooner than expected.

In addition to that, WTI eased on Wednesday after the unexpected rise in US stockpiles. The American Petroleum Institute data showed a 2.3 million barrel expansion in crude oil inventories.

As for now, traders are waiting for the US Durable Goods Orders, BOC Interest Rate Decision data to take fresh trading impetus.

USD/CAD additioanal levels