USD/CAD consolidates near weekly high, around 1.4070 as traders await Powell’s speech

• USD/CAD lacks any firm intraday direction and is influenced by a combination of diverging forces. 
• The overnight rally in Oil prices and reduced bets for a larger BoC rate cut underpins the Loonie.
• The USD bulls remain on the sidelines ahead of Fed Chair Jerome Powell’s speech later today. 

The USD/CAD pair struggles to capitalize on its gains registered over the past two days and oscillates in a range, around the 1.4070 area during the Asian session on Wednesday. Spot prices remain close to the weekly high, though the mixed fundamental backdrop warrants some caution before placing fresh bullish bets. 

Crude Oil prices consolidate the previous day’s strong gains amid expectations that OPEC+ will announce an extension of supply cuts on Thursday. Adding to this, Israel’s threat to attack the Lebanese state if its truce with Hezbollah collapses lends some support to the black liquid. This, along with reduced bets for a bigger rate cut by the Bank of Canada (BoC) in December, could underpin the commodity-linked Loonie and act as a headwind for the USD/CAD pair. 

Meanwhile, the US Dollar (USD) continues with its struggle to gain any meaningful positive traction as traders seem reluctant to place aggressive bets ahead of Federal Reserve (Fed) Chair Jerome Powell’s speech. This might further contribute to capping gains for the USD/CAD pair. However, expectations that the Fed will take a cautious stance on cutting rates amid concerns that Trump’s expansionary policies will boost inflation should act as a tailwind for the buck. 

Traders might also await the release of the US Nonfarm Payrolls (NFP) report on Friday, which should provide more cues about the Fed’s rate-cut path and influence the near-term USD price dynamics. This, in turn, suggests that any meaningful USD/CAD slide could be seen as a buying opportunity and remain limited.