USD/CAD struggles to breach 1.2860 ahead of PMI data, Fed remains in the spotlight

• USD/CAD is facing barricades near 1.2860 as investors await PMI’s release.
• A jumbo rate hike by the Fed looks imminent.
• Oil prices look to surpass $105.00 as Germany sees ending its dependence on Russian oil by late summer.

The USD/CAD pair is struggling to overstep 1.2860 as investors are on the sidelines ahead of the release of the US and Canada’s Purchase Managers Index (PMI) data on Monday. Investors are seeing a standard outperformance from the US economy as the Institute for Supply Management (ISM) is expected to print the US PMI at 58 against the prior print of 57.1. While, the oil-exporting economy sees a release of its PMI by the S&P Global at 57.9 against the previous figure of 58.9, which indicates an underperformance.

The week is going to be full of rough moves as the Federal Reserve (Fed) will dictate the interest rate decision. Investors should brace for higher uncertainty even though the market participants have already priced in the jumbo rate hike from Fed. The market participants will keep an eye on the extent of hawkish guidance from the Fed. The Fed looks committed to returning to neutral rates as early as possible to tame multi-decade high inflation rates. Therefore, Fed will focus on shoring up its policy rates swiftly.

Meanwhile, the oil prices have climbed to near $105.00 in the Asian session on an expectation of elevating supply concerns. Germany could end its dependence on Russian oil by the end of the summer, as per Bloomberg. This has bolstered the odds of a European embargo on the Russian oil imports, which will strengthen the supply concerns and henceforth the prices of oil in the global market.