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• USD/CAD attracts fresh sellers on Wednesday amid a modest USD downtick.
• Dovish Fed expectations, along with a positive risk tone, weigh on the buck.
• Sliding Oil prices to undermine the Loonie and lend support ahead of Fed’s Powell.

The USD/CAD pair meets with some supply during the Asian session on Thursday and erodes a part of the overnight recovery gains from the 1.3420 region, or its lowest level since March 8. Spot prices currently trade around the 1.3470-1.3465 region, down over 0.10% for the day amid a modest US Dollar (USD) downtick, though some follow-through selling around Crude Oil prices could help limit deeper losses.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, stalls the overnight goodish rebound from the vicinity of the YTD low amid bets for another 50 basis points (bps) interest rate cut by the Federal Reserve (Fed) in November. Apart from this, the underlying bullish tone – as depicted by a fresh leg up in the equity markets – further undermines the safe-haven buck and exerts some downward pressure on the USD/CAD pair. 

Meanwhile, doubts about sustained fuel demand growth in China – the world's top oil importer – and easing worries over supply disruptions in Libya drag Crude Oil prices further away from a three-week high touched on Tuesday. Despite a slew of stimulus measures announced this week, investors remain uncertain about China's economic recovery. This, along with signs of the return of Libyan oil to the market, further seems to weigh on the black liquid. 

This, in turn, could undermine demand for the commodity-linked Loonie and lend some support to the USD/CAD pair. Traders might also prefer to move to the sidelines and refrain from placing aggressive directional bets ahead of speeches by influential FOMC members, including Fed Chair Jerome Powell, later during the North American session. Apart from this, the US economic data will drive the USD demand and produce short-term trading opportunities.

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