USD/CAD holds steady near multi-month high post-US/Canadian data, focus remains on FOMC

• Weaker oil prices undermined the loonie and pushed USD/CAD to a fresh multi-month high.
• Disappointing US Retail Sales was offset by softer Canadian CPI and failed to provide impetus.
• The market focus remains glued to the outcome of a two-day FOMC monetary policy meeting.

The USD/CAD pair had a rather muted reaction to the US/Canadian macro data and held steady near a multi-month high, around the 1.2880 region through the early North American session.

According to the data published by the US Census Bureau revealed, the headline US Retail Sales recorded a modest 0.3% growth in November as against 0.8% expected and 1.8% previous. Adding to this, sales excluding autos also fell short of consensus estimates and rose 0.3% during the reported month. This, in turn, held back the US dollar bulls on the defensive and acted as a headwind for the USD/CAD pair.

The downside, however, remains cushioned amid weaker crude oil prices, which tend to undermine the commodity-linked loonie. Apart from this, a slight disappointment from the Bank of Canada's Core CPI, which remain flat in November, extended some support to the USD/CAD pair. Investors also seemed reluctant to place aggressive bets, rather preferred to wait on the sidelines ahead of the crucial FOMC decision.

The Fed is scheduled to announce the outcome of a two-day monetary policy meeting later during the US session, which will influence the USD demand in the near term. Apart from this, oil price dynamics would be looked upon for some meaningful trading opportunities around the USD/CAD pair. Nevertheless, bulls, so far, have managed to retain control and might now be eying to test September swing high, around the 1.2900 mark.

Technical levels to watch