USD/CAD trading flat just above 1.2700 level ahead release of minutes from hawkish December Fed meeting

• USD/CAD has traded indecisively on Wednesday and is one of the worse G10 performers despite higher oil prices.
• A hot US ADP report and mixed Canadian housing data was ignored, with markets focused on the Fed minutes.

USD/CAD has traded indecisively thus far this Wednesday, trading within a relatively thin 1.2700-1.2750 range, roughly midway between its 21 and 50-day moving averages which reside at 1.2670 and 1.2787 respectively. At current levels just above 1.2700, the pair is trading flat on the day.

A much strong than forecast US ADP national employment change report did little to shift the dial for the pair. USD may be struggling to pick up in wake of the hot labour market data given that we still need confirmation from the official December jobs report that last month saw bumper jobs growth. Meanwhile, Tuesday’s ISM manufacturing survey sent strong signals via the prices paid subindex that the peak in US inflation may soon be in, which some think will ease pressure on the Fed to be hawkish in 2022.

Canadian data in the form of November Building Permits, which saw MoM growth beat expectations, and November New Housing Price Index numbers, which fell short of expectations, have not influenced the loonie. The Canadian dollar is actually one of the G10 underperformers on Wednesday, despite strength in crude oil prices. FX traders will not want to read too much into the loonie’s intraday underperformance ahead of the release of key Canadian jobs data on Friday, which is released alongside the official US jobs report. Ahead of that though, USD/CAD traders will need to keep an eye on the release of the minutes from the hawkish December Fed meeting at 1900GMT.