USD/CAD traders eye the BoC and the oil price for cues

• USD/CAD stays offered at the start of the week. 
• Eyes on the BoC and oil prices that are meeting resistance. 

USD/CAD is a touch offered in the open on Monday ahead of a busy schedule for the next two weeks that will include red news on the US calendar, the Bank of Canada interest rate decision and then the Federal Reserve interest rate decision the following week. We will also have the usual start of the month's employment data for North America to wrap things up. 

The Canadian dollar has been recouping losses from earlier in the week and flourished in a risk-on setting while US stocks rallied on the back of dovish sentiment over the Federal Reserve. The CAD was boosted in anticipation of hawkish forward guidance from this week's Bank of Canada meeting. For the week, the currency was up 0.1%, for a fifth consecutive week of gains, the longest such sequence since May 2021.

''We look for the BoC to hike by 25bp at its January meeting, lifting the overnight rate to 4.50%. We expect this will be the last BoC hike this cycle, though the forward guidance is likely to leave open the possibility of additional tightening,'' analysts at TD Securities said. ''We would put the odds of no move from the BoC at one-in-three. We expect the Bank will continue quantitative tightening.''

Canada is a major producer of commodities, with oil the major correlation that rallied into the close on Friday. Speculators have begun to add back positions in the black gold as risk appetite surged and Chinese demand expectations come to the forefront again. ''Investors began to add length and cover the recent short position,'' analysts at TD Securities explained.

''Indeed, many market participants are now expecting strong demand growth in 2023 as Chinese re-opening drives growth, while monetary policy pivots are also on the radar in the Western world,'' the analysts added further. 

However, at the start of the week, WTI is under pressure which could put a bump in the road for CAD bull for the day ahead.