USD/CAD sees a downside below 1.2900 as DXY sets for a bumpy ride, Jackson Hole buzz

• USD/CAD is likely to display more losses if the asset drops below 1.2900.
• Fed’s Powell is expected to adopt a less-hawkish tone while discussing over policy guidance.
• Oil prices have turned into a correction mode after printing a high near $95.00.

The USD/CAD pair is displaying a lackluster performance after slipping below the crucial support of 1.2940 in the late New York session. The asset is expected to extend its losses if it surrenders the round-level support of 1.2900. The pair is attracting a lot of offers as the US dollar index (DXY) is likely to display more weakness amid uncertainty over Jackson Hole Economic Symposium.

As the investing community is expecting that the Federal Reserve (Fed) will choose a less-hawkish tone while discussing the guidance over interest rates at Jackson Hole, the DXY is losing its strength. No doubt, the asset displayed a decent pullback move on Thursday after refreshing a two-day low at 108.00. But that short-lived pullback could turn into a fresh bearish impulsive wave if Fed chair Jerome Powell’s commentary matches street expectations.

The consequences of using a higher pace for hiking interest rates are visible to the market participants. US private sector has contracted, especially the service sector, which carries the potential of accelerating fears of a slowdown in tech companies globally. Also, a decline in US Durable Goods Orders indicates that the overall demand is going through a bumpy ride.

Meanwhile, oil prices have witnessed a mild correction after a juggernaut rally over the past few trading sessions. The black gold has surrendered more than 3% after printing a high to near $95.00 as the announcement of production cuts by OPEC has started fading away and investors are realizing that dismal global Purchasing Managers Index (PMI) numbers are the outcome of a slowdown in overall demand.

Investors should be aware of the fact that Canada is a leading exporter of oil to the US. And, higher oil prices will bring higher revenues to Canada and will strengthen its fiscal balance sheet.