USD/CAD rebounds from over one-week low, holds above mid-1.3300s amid sliding oil prices

• USD/CAD quickly reverses an intraday dip to over a one-week low.
• Sliding crude oil prices undermines the Loonie and acts as a tailwind.
• Hawkish Fed expectations limit the USD downside and lend support.

The USD/CAD pair recovers a few pips from over a one-week low touched during the early North American session and is currently placed around the 1.3350-1.3355 area, up less than 0.10% for the day.

A modest downtick in the US Treasury bond yields, along with an intraday turnaround in the equity markets, prompt some selling around the safe-haven US Dollar and exerts pressure on the USD/CAD pair. That said, a combination of factors helps limit any further losses and assists spot prices to attract some buyers near the 1.3325 region.

Crude oil prices once again fail near a technically significant 200-day SMA and kick off the new week on a weaker note. This, in turn, is seen undermining the commodity-linked Loonie. Apart from this, the prospects for further policy tightening by the Fed act as a tailwind for the greenback and contributes to limiting losses for the USD/CAD pair.

Investors seem convinced that the US central bank will stick to its hawkish stance and the bets were fueled by the risk of higher US inflation print for January. Hence, the focus will remain glued to the crucial US CPI report, due for release on Tuesday, which will influence the Fed's rate-hike path and drive the USD demand in the near term.

Ahead of the key data risk, the US bond yields and the broader risk sentiment will play a key role in influencing the greenback in the absence of any relevant market-moving economic data. Apart from this, traders will take cues from oil price dynamics to grab short-term opportunities around the USD/CAD pair.

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