USD/CAD struggles near weekly low amid bearish USD, uptick in oil prices

• USD/CAD refreshes weekly low on Friday amid sustained selling around the US Dollar.
• The less hawkish FOMC minutes and a positive risk tone continue to weigh on the buck.
• An uptick in oil prices underpins the Loonie and contributes to the pair’s modest decline.

The USD/CAD pair remains under some selling pressure for the fourth successive day on Friday and drops to a fresh weekly low heading into the European session. Spot prices, however, manage to hold above the 1.3300 round-figure mark and remain at the mercy of the US Dollar price dynamics.

A dovish assessment of the FOMC meeting minutes released on Wednesday continues to weigh on the buck and is seen as a key factor acting as a headwind for the USD/CAD pair. In fact, officials were largely satisfied that they could stop front-loading the rate increases and that slowing the rate-hiking cycle would soon be appropriate. This, in turn, cements expectations for a 50 bps lift-off at the December FOMC meeting and drags the yield on the benchmark 10-year US government bond to its lowest level since early October.

Apart from this, a generally positive tone around the equity markets is seen as another factor weighing on the safe-haven greenback. Furthermore, some follow-through uptick in crude oil prices underpins the commodity-linked Loonie and exerts additional downward pressure on the USD/CAD pair. That said, worries that the worsening COVID-19 situation in China will dent fuel demand keep a lid on any further gains for the black liquid. This, in turn, is holding back traders from placing aggressive bearish bets around the USD/CAD pair.

In the absence of any major market-moving economic releases, either from the US or Canada, the US bond yields and the broader market risk sentiment will drive the USD demand. Apart from this, traders will further take cues from oil price dynamics to grab short-term opportunities around the USD/CAD pair. The intraday momentum, however, is likely to remain limited amid relatively thin trading volumes on the last day of the week.

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