USD/CAD corrects to near 1.2850 on subdued DXY, oil steadies

• USD/CAD has displayed a corrective move to near 1.2850 amid subdued performance from the DXY.
• Investors will keep an eye on the release of the FOMC minutes.
• A vulnerable performance is expected from the US and Canada employment generation figures.

The USD/CAD pair has witnessed a mild correction to near 1.2850 after facing barricades below 1.2900 in the New York session. The asset has remained in the grip of bears from Friday after failing to sustain above the critical hurdle of 1.2950. The major may correct further if it violates Monday’s low at 1.2837.

This week, the major event which will drive the FX domain is the release of the Federal Open Market Committee (FOMC) minutes on Wednesday. Investors community is aware of the fact that the Federal Reserve (Fed) elevated its interest rates by 75 basis points (bps) in its June monetary policy meeting. Prior to that, Fed chair Jerome Powell stated that the central bank doesn’t see rate elevation above 50 basis points (bps) at all.

By all means, Fed went beyond its statement and dictated a bumper rate hike. Therefore, it is necessary to get a detailed view of the ideology behind announcing a giant rate hike.  

On the oil front, oil prices are heading to recapture their weekly high at $112.73 amid soaring fears of supply worries. Considering the prohibition of massive oil imports from Russia, it is understood that the oil market will remain tight for a prolonged period. Also, many OPEC members do not have the required infrastructure to accelerate the output except Saudi Arabia and UAE. And, these nations are already producing near to their maximum capacity.

This week, the employment data will be of utmost significance. The US economy will report the US Nonfarm Payrolls (NFP) at 270k for June, significantly lower than the former release of 390k. Also, the Canadian agencies are expected to report lower employment generation at 22.5k, lower than the prior release of 39.8k.