USD/CAD juggles below 1.3700, upside seems favored ahead of US ISM PMI

• USD/CAD is expected to recapture 1.3700 amid risk-off market impulse.
• S&P500 faced pressure as investors turned risk-averse ahead of FOMC minutes.
• Higher interest rates by the Fed might be responsible for the lower consensus of the US ISM PMI.

The USD/CAD pair is displaying back-and-forth moves in a narrow range below the round-level resistance of 1.3600 in the early Asian session. The Loonie asset is expected to extend its upside journey by surpassing the immediate hurdle of 1.3680 amid caution in the global market.

S&P500 witnessed selling pressure as investors turned risk-averse ahead of the minutes of December’s Federal Open Market Committee (FOMC) meeting. The US Dollar Index (DXY) delivered a recovery move after remaining volatile and jumped above 104.30. Investors remained gung-ho over the USD Index on expectations of a hawkish policy outlook for CY2023 by the Federal Reserve (Fed).

Fed chair Jerome Powell cited in the last monetary policy meeting of CY2022 that the central bank will not shy from hiking interest rates if it feels the inability to tame the stubborn inflation.

But before the FOMC minutes, investors will keep an eye on the United States ISM Manufacturing PMI (Dec) data, which will release on Wednesday. According to the estimates, the economic data will drop to 48.5 vs. the former release of 49.0. The consequences of higher interest rates by the Fed have resulted in a lower volume of manufacturing activities as firms have postponed their expansion plans. Apart from that, New Orders Index data will hog the limelight, which is seen higher at 48.1 vs. the former release of 47.2.

On the Lonnie front, investors are keenly waiting for Friday’s employment data. As per the consensus, the Canadian economy has generated fresh 8K payrolls in December vs. the former release of 10.1K. The Unemployment Rate is seen higher at 5.2% against 5.1% recorded earlier.