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The USD/CAD pair trades with mild gains near 1.3810 during the early European session on Wednesday. A fall in crude oil prices exerts some selling pressure on the commodity-linked Canadian Dollar (CAD) against the Greenback. Traders brace for the US economic data for clues about the timing of potential interest rate cuts by the Federal Reserve (Fed). 

US President Donald ‌Trump said on Tuesday that Venezuela will be turning over 30 million ‌to 50 million barrels of sanctioned oil to the US. "The prospect of Venezuelan oil replacing some Canadian supply has prompted a reassessment of previously bullish 2026 CAD views," said Kevin Ford, FX & macro strategist at Convera. It’s worth noting that Canada is the largest oil exporter to the US, and lower crude oil prices tend to have a negative impact on the CAD. 

On the other hand, dovish comments from Fed policymakers could drag the US dollar (USD) lower. Fed Governor Stephen Miran said he expects incoming data to continue signaling that rate cuts are appropriate, warning that keeping policy too tight could “nip growth in the bud,” while adding that he remains optimistic about the broader economic outlook. Meanwhile, Minneapolis Fed President Neel Kashkari stated that he sees a risk that the jobless rate could "pop" higher.

The US ISM Services Purchasing Managers Index (PMI) report will be published later on Wednesday. The attention will shift to the US December employment data on Friday, as it might offer some hints about the US interest rate path. The market consensus forecast for Nonfarm Payrolls (NFP) is for a gain of 55,000 jobs.

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