USD/CAD holds steady above mid-1.3700s, near its highest level since early May

• USD/CAD oscillates in a narrow band and is influenced by a combination of diverging forces.
• Traders scaled back September Fed rate cut bets after the upbeat US NFP, boosting the USD.
• An uptick in Crude Oil prices underpins the Loonie and keeps a lid on further gains for the pair.

The USD/CAD pair struggles to capitalize on the post-NFP move up and seesaws between tepid gains/minor losses, just above mid-1.3700s during the Asian session on Monday. The subdued price action is influenced by a combination of diverging forces, though the fundamental backdrop seems tilted in favor of bullish traders. 

The US Dollar (USD) climbs to a nearly four-week high in the wake of expectations that the Federal Reserve (Fed) will keep rates higher for longer amid the still resilient US economy, bolstered by Friday's stronger-than-expected US jobs data. The hawkish bets, meanwhile, remain supportive of elevated US Treasury bond yields, which, along with the cautious market mood, acts as a tailwind for the safe-haven Greenback and the USD/CAD pair.

Meanwhile, Crude Oil prices regained some positive traction and look to build on last week's bounce from a four-month low amid comments by OPEC ministers that they would not increase supply if prices remained weak. This, in turn, is seen underpinning the commodity-linked Loonie and capping the USD/CAD pair. Traders also seem reluctant to place aggressive directional bets ahead of this week's US macro data and central bank event risk.

The latest US consumer inflation figures are due for release on Wednesday and will be followed by the outcome of the highly anticipated FOMC monetary policy decision. This will help investors determine the likely timing when the Fed will begin its rate-cutting cycle, which should influence the USD. In the meantime, speculations about another rate reduction by the Bank of Canada (BoC) next month might act as a tailwind for the USD/CAD pair.