USD/CAD sits near one-week top, eyes US macro data and FOMC minutes for fresh impetus

• USD/CAD ticks higher for the fifth straight day and draws support from a combination of factors.
• Weaker Oil prices undermine the Loonie, while doubt over early Fed rate cuts benefits the USD.
• Traders now look to the US macro data for some impetus ahead of the FOMC meeting minutes.

The USD/CAD pair trades with a positive bias for the fifth successive day on Wednesday and hovers around the 1.3330 area, or over a one-week high during the Asian session.

Easing concerns that tensions in the Red Sea will disrupt supplies, along with weak economic data from top importer China, keep Crude Oil prices depressed near a two-week low. This, along with the Bank of Canada (BoC) Governor Tiff Macklem’s recent remarks, saying that the central bank could also start cutting rates sometime in 2024, undermines the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair.

The US Dollar (USD), on the other hand, enters a bullish consolidation phase after recording its biggest daily percentage gains since October on Tuesday amid doubts over early interest rate cuts by the Federal Reserve (Fed). This, along with the overnight sharp move higher in the US Treasury bond yields and the cautious market mood, is seen benefiting the safe-haven Greenback and lending some support to the USD/CAD pair.

Investors now look to the US economic docket, featuring the release of the ISM Manufacturing PMI and JOLTS Job Openings data later during the North American session. The focus, however, will remain on the FOMC meeting minutes, which will be scrutinized for cues about the timing of when the Fed will start cutting rates. This, in turn, will drive the USD demand. Apart from this, Oil price dynamics should influence the USD/CAD pair.

Technical levels to watch