USD/CAD advances to 1.3675 area, highest since August 19 ahead of FOMC minutes

• USD/CAD gains positive traction for the sixth successive day amid renewed USD buying.
• The overnight slump in Oil prices undermines the Loonie and lends support to the pair.
• Traders now look forward to the release of the FOMC minutes for a short-term impetus.

The USD/CAD pair scales higher for the sixth successive day on Wednesday and climbs to the 1.3670-1.3675 area, or its highest level since August 19 during the first half of the European session amid renewed US Dollar (USD) buying.

Following a brief consolidation over the past two days, the USD attracts fresh buyers amid firming expectations that the Federal Reserve (Fed) will go slow on interest rate cuts. In fact, traders are currently pricing in over an 85% chance that the US central bank will lower borrowing costs by 25 basis points in November amid signs of a still resilient labor market. This allows the yield on the benchmark 10-year US government bond to hold above the 4.0% threshold, which lifts the USD to its highest level since August 16 and continues to act as a tailwind for the USD/CAD pair. 

Meanwhile, news of a possible ceasefire between Lebanon's Hezbollah and Israel lowered the geopolitical risk premium in the markets. This led to the overnight slump in Crude Oil prices, which, along with bets for a jumbo interest rate cut by the Bank of Canada (BoC) later this month, undermines the commodity-linked Loonie and boosts the USD/CAD pair amid some follow-through technical buying above the 200-day Simple Moving Average (SMA). 

Moving ahead, investors now look forward to the release of the FOMC meeting minutes, due later during the North American session. This, along with the US Consumer Price Index (CPI) and the US Producer Price Index (PPI) on Thursday and Friday, respectively, will be looked upon for cues about the Fed's rate-cut path. This, in turn, will drive the USD demand in the near term. Apart from this, Canadian monthly employment details on Friday should provide some meaningful impetus to the USD/CAD pair and help in determining the next leg of a directional move.