USD/CAD holds in a tight range awaiting a catalyst

• USD/CAD is holding in a range on Tuesday as markets await FOMC minutes this week.
• Oil prices are firm despite prospects of supply from US reserves.

USD/CAD is flat in Asia following a relatively stable session overnight where the price moved in a round turn of around 35 pips with a brief time above 1.25 the figure. The US dollar was firm at the start of the week, keeping a lid on commodity FX tried to keep up with the US stock markets.

Oil, on the other hand, managed to take off despite the release of 180-million barrels from the US Strategic Petroleum Reserve (SPR) and an agreement last week from members of the International Energy Agency (IEA) to release some of their own strategic reserves, oil is firmer due to the persistence of geopolitical concerns.

The move higher in oil helped to support the CAD and rallies have been faded in USD/CAD. WTI spot was up by some 4.5% overnight as White House's National Security Advisor, Jake Sullivan, announced that the US is working with European allies to coordinate further sanctions on Russia.

Meanwhile, US 10-year yields were firmer due to the narrative surrounding the Federal Reserve. and the curve slightly steepened as the market consolidated on the back of a light news day. 10-year government bond yields range traded and finished slightly higher at 2.40%. In turn, the US dollar climbed in tandem with the yield.

Looking ahead to the week, the minutes of the FOMC meeting are due. Fed officials began the process of policy normalization by lifting rates 25bp to 0.25%-0.50% at the March meeting.

''The FOMC pull no hawkish punches in its policy guidance, with Chair Powell also hinting further information about QT plans will be provided in the minutes (possibly including caps details). We continue to expect an official QT announcement at the May FOMC meeting,'' analysts at TD Securities explained.