USD/CAD stays depressed near 1.3300 as Oil price grinds higher, focus on OPEC+, Fed

• USD/CAD licks its wounds after falling the most in a week.
• Oil price struggles despite softer US Dollar as markets brace for OPEC+ verdict.
• Softer US data, yields join bearish bias for the Fed to lure Loonie pair sellers.
• Canada GDP appeared unimpressive but PMIs may offer intermediate moves.

USD/CAD remains defensive around 1.3310 amid sluggish markets on early Wednesday, treading water after reversing from a one-week high the previous day.

The Loonie pair’s latest inaction portrays the cautious mood ahead of the Federal Open Market Committee (FOMC) monetary policy meeting. Also challenging the quote is the Oil traders' anxiety before the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known collectively as OPEC+.

That said, the WTI crude oil, Canada’s main export earner, grinds higher past $79.00 following a strong reversal from the three-week on Tuesday. It should be noted that Reuters has already turned down the odds of any change in the OPEC+ JMMC’s previous verdict favoring the supply cuts from major producers.

On the other hand, the US Dollar Index (DXY) remains indecisive after reversing from a one-week high as an early signal for the US inflation printed downbeat figures. That said, US Employment Cost Index (ECI) for the fourth quarter (Q4) eased to 1.0% versus 1.1% market forecasts and 1.2% prior readings. Further, the Conference Board (CB) Consumer Confidence eased to 107.10 in January versus 108.3 prior. It should be noted that no major attention could be given to the US Chicago Purchasing Managers’ Index (PMI) for January which rose to 44.3 versus 41 expected and 44.9 previous readings.

At home, Canadian Gross Domestic Product (GDP) for November grew by 0.1% MoM, matching October's expansion of 0.1% but rose past the market expectation of 0%.

It should be observed that the pre-event cautiousness joins China’s Consecutive sixth below 50.0 print of the Caixin Manufacturing PMI, which in turn probes the Oil price and put a floor under the USD/CAD. Additionally, mildly offered S&P 500 Futures act as an additional challenge for the Loonie pair sellers.

On the contrary, downbeat yields challenge the US Dollar bulls ahead of the key event. The benchmark US 10-year Treasury bond yields remain sluggish near 3.51% and defend the previous day’s pullback.

Looking forward, dovish bias over the Fed joins the likely unimpressive OPEC+ meeting to keep USD/CAD bears hopeful. Also important will be the monthly PMI data for the US and Canada.

Technical analysis

Unless providing a daily close beyond the one-month-old descending resistance line, close to 1.3380 by the press time, USD/CAD is on the way to late 2022 low surrounding 1.3225.