USD/CAD clings to gains above 1.3400 amid sliding oil prices, eyes US data/FOMC minutes

• USD/CAD catches some bids on Wednesday and recovers a part of the overnight losses.
• A fresh leg down in oil prices undermines the Loonie and remains supportive of the move.
• Bets for less aggressive Fed rate hikes weigh on the USD and might cap gains for the pair.
• Traders now look to the US macro data for some impetus ahead of the key FOMC minutes.

The USD/CAD pair attracts some buying near the 1.3360-1.3355 area and stages a goodish bonce from the weekly low touched earlier this Wednesday. The pair reaches a fresh daily high near the 1.3425 region during the early North American session and for now, seems to have stalled this week's corrective slide from the vicinity of the 1.3500 psychological mark.

A fresh leg down in crude oil prices is seen undermining the commodity-linked loonie and turning out to be a key factor acting as a tailwind for the USD/CAD pair. An imminent price cap on Russian oil by the Group of Seven (G7) nations, along with worries that a new COVID-19 outbreak in China will hurdle fuel demand, weigh on the black liquid. Moreover, the Organisation for Economic Cooperation and Development (OECD) sees a deceleration in global economic expansion next year and further adding pressure on crude oil prices.

The US Dollar, on the other hand, remains depressed for the second straight day amid growing acceptance that the Fed will slow the pace of its policy tightening. In fact, the markets are currently pricing in a greater chance of a relatively smaller 50 bps Fed rate hike move in December. Furthermore, stable performance in the equity markets is seen as another factor weighing on the safe-haven greenback. This, in turn, might cap any further gains for the USD/CAD pair as the market focus remains glued to the FOMC meeting minutes.

Investors will look for clues about the Fed's policy outlook and future rate hike path. This will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the USD/CAD pair. Heading into the key event risk, the US economic docket - featuring the releases of Durable Goods Orders, Weekly Initial Jobless Claims, flash PMIs and New Home Sales data - might produce short-term trading opportunities.

Technical levels to watch