USD/CAD juggles around 1.3500 as investors await US FOMC minutes

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• USD/CAD is oscillating in a narrow range around 1.3500 ahead of FOMC minutes.
• Republicans are not agreeing on levying extra taxes on the Wealthy community or supporting higher spending initiatives.
• The oil price has printed a fresh three-week high around $74.00 as global central banks are reaching the terminal rate.

The USD/CAD pair is demonstrating topsy-turvy moves near the psychological figure of 1.3500 in the early Asian session. The Loonie asset is expected to remain sideways ahead of the release of the Federal Open Market Committee (FOMC) minutes for May’s monetary policy meeting.

S&P500 futures have added some gains in early Tokyo after a bearish Tuesday. The overall market mood is still risk-off amid deepening issues associated with US debt-ceiling case. US House Speaker Kevin McCarthy told House Republicans during a closed GOP meeting on Tuesday that “I need you all to hang with me on the debt limit, we are nowhere near a deal yet,”

Uncertainty about US borrowing cap issue soars after US President Joe Biden called partisan terms proposed by Speak McCarthy ‘extreme’. The latter is not agreed on levying extra taxes on the Wealthy community nor is he supporting higher spending initiatives.

The US Dollar Index (DXY) is showing signs of volatility contraction after reaching near the previous week’s high above 103.62. More gains are in the pipeline ahead of the FOMC minutes, which will provide a detailed explanation behind the 25 basis points (bps) interest rate hike by the Federal Reserve (Fed). Also, it will report current economic prospects and would deliver guidance on interest rates.

Meanwhile, the oil price has printed a fresh three-week high around $74.00 as investors seem confident that the US economy will not default and would find a bipartisan deal with Republicans. Also, other central banks are reaching the terminal rate, which is easing fears of a further slowdown.

It is worth noting that Canada is the leading exporter of oil to the United States and higher oil prices will support the Canadian Dollar.