- A combination of factors drove USD / CAD lower on Wednesday.
- Bullish oil prices propped up the loonie and put pressure amid a weaker dollar.
- The market focus remains glued to the outcome of the FOMC monetary policy meeting.
The USD / CAD pair maintained its bid tone during the first half of the European session, although it has managed to recover few pips from the daily lows. The pair was trading below 1.2800, falling 0.15% on the day.
A combination of factors that did not help the USD / CAD capitalize on the previous day’s rebound from the 1.2745-40 region, instead triggered new selling on Wednesday. The rebound in equity markets weighed on the US dollar. Apart from this, rising oil prices propped up the loonie.
Chinese real estate giant Evergrande Group said it would pay interest on the bonds due Thursday and eased immediate fears of a disorderly corporate collapse. This, in turn, boosted global risk sentiment. For its part, a barrel of WTI rose 1.5% on Wednesday amid signs of a tight supply and an improvement in demand. Tuesday’s figures from the American Petroleum Institute (API) showed that US crude stocks fell by 6.1 million barrels last week. Traders are now waiting for official data on Wednesday to confirm the drop.
The focus of traders and analysts is on the Federal Reserve. Today the two-day meeting will conclude and the decisions will be known. No changes are expected with respect to the interest rate. Investors will be looking for clues as to the likely timing of the buyout program cut. Apart from this, updated economic projections and so-called dot charts will play a key role on market expectations and therefore on the dollar and bonds.