USD/CAD marches towards 1.3400 as oil bulls take a breather, Fed Minutes eyed

• USD/CAD grinds near intraday high after posting the biggest daily fall in two weeks.
• Oil prices stabilize following a rebound from the 10-month low.
• Market’s anxiety ahead of the key data/events joins China’s Covid woes to challenge the Canadian Dollar.

USD/CAD picks up bids to refresh intraday high near 1.3380 during early Wednesday. The Loonie pair’s latest rebound could be linked to the market’s sour sentiment, as well as a pause in the WTI crude oil’s recovery moves. However, a cautious mood ahead of the key data/events challenges the pair buyers.

Risk appetite fades the previous day’s optimism as headlines suggesting a jump in China’s Covid numbers joined the Reserve Bank of New Zealand’s (RBNZ) utterly hawkish move to suggest that the global central banks aren’t out of steam. Additionally, anxiety ahead of the preliminary readings of November’s PMIs, the Federal Open Market Committee (FOMC) Meeting Minutes and the US Durable Goods Orders for October also weigh on the sentiment.

While portraying the mood, S&P 500 Futures print mild losses while the US 10-year Treasury yields struggle for clear directions near 3.75%.

It’s worth noting that prices of Canada’s biggest export-item WTI crude oil seesaw around $81.00 after bouncing off a 10-month low the previous day. The black gold rose the previous day amid fears of a supply crunch and talks of the oil price cap, as well as Saudi Arabia’s rejection to support the OPEC+ output increase signals.

On Tuesday, firmer sentiment and recovery in oil prices favored the USD/CAD bears. On the same line could be the upbeat prints of Canada’s Retail Sales for September. In doing so, the Loonie pair ignored firmer US data and hawkish comments from the US Federal Reserve (Fed) officials. That said, Richmond Fed Manufacturing Index improved to -9 for November versus -10 prior while Kansas City Federal Reserve President Esther George recently said, “(We) could well take a higher interest rate for some time to convince households to hold on to savings.”

Moving on, USD/CAD is likely to witness a sluggish day amid the market’s pre-event fears. However, traders will pay major attention to the oil fundamentals and the Fed Minutes for clear directions.

Technical analysis

A clear U-turn from the 21-DMA hurdle of 1.3466, as well as a downside break of the one-week-old ascending trend line, currently around 1.3390, keeps the USD/CAD bears hopeful of refreshing the monthly low surrounding 1.3230.