USD/CAD approaches 1.3280 as USD Index picks support ahead of US Manufacturing PMI

• USD/CAD is marching towards 1.3280 as the USD index is gauging support.
• S&P500 futures have generated marginal gains in Europe, portraying strength in the risk-appetite theme.
• Fed Bostic believes that the central bank has reached to a point where interest rates are sufficiently restrictive to bring down inflation to 2%.

The USD/CAD pair is approaching the immediate resistance of 1.3280 in the London session. The Loonie asset is gathering strength to capture the aforementioned resistance as the US Dollar Index (DXY) has gauged support after correcting to near 103.11.

S&P500 futures have generated marginal gains in Europe, portraying strength in the risk-appetite theme. The market mood is quite upbeat as investors are anticipating that only one interest rate hike has left till the year-end. The US Dollar Index (DXY) is looking to conclude its corrective move and will resume its upside journey toward its intraday high of 103.24.

The strength in the USD Index has not impacted despite dovish commentary from Atlanta Fed Bank President Raphael Bostic. Fed Bostic believes that the central bank has reached to a point where interest rates are sufficiently restrictive to bring down inflation to 2%. A pause should be taken by the Fed to avoid impacting economic activities.

Investors would get much clarity about the economic conditions in the United States with the release of the Manufacturing PMI by the ISM department at 14.00 GMT. Investors are anticipating some increase in the economic data to 47.2 vs. the former release of 46.9. US factory activities have been contracting straight for the past seven months.

Apart from that, the US factory orders index will also remain in focus. The economic data is seen higher at 44.0 against the former release of 42.6.

On the Canadian Dollar front, inflation softening and some cracks in Employment numbers have lifted the odds of a pause in the policy-tightening spell by the Bank of Canada (BoC). Investors should note that BoC Governor Tiff Macklem has already raised interest rates to 4.75%.

Oil prices have shown some correction after reaching near $71.60. The black gold is expected to resume its upside journey as Saudi Arabia's Ministry for Energy announced it would be extending its production cut for crude for an extra month, as reported by Newswires.

It is worth noting that Canada is the leading exporter of oil to the United States and higher oil prices would support the Canadian Dollar.