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

• USD/CAD has no clear direction during the day and is influenced by a combination of divergent forces.
• An overnight rise in oil prices and a reduction in bets that the central bank will cut deep interest rates are supporting the loonie.
• USD bulls continue to wait and see ahead of Fed Chair Jerome Powell's speech later today.

The USD/CAD pair has been struggling to capitalize on the gains recorded over the past two days and has been range-bound around 1.4070 during Asian trading on Wednesday. While spot prices remain near weekly highs, the fundamental environment is complex and some caution is warranted before making new bullish bets.

Oil prices consolidated the previous day's strong gains on expectations that OPEC+ will announce an extension of supply cuts on Thursday. In addition to this, Israel's threat to attack the Lebanese state if the ceasefire agreement with Hezbollah breaks down also lends some support to this dark liquid. This, along with reduced bets on a deep rate cut by the Bank of Canada (BoC) in December, supports the commodity-related loonie and could be a headwind for the USD/CAD pair.

Meanwhile, the US dollar (USD) struggled to gain meaningful positive traction as traders appeared reluctant to make aggressive bets ahead of Federal Reserve Chairman Jerome Powell's speech. Continuing. This could further contribute to capping the rise in the USD/CAD pair. However, expectations that the Federal Reserve will take a cautious approach to lowering interest rates will likely provide a tailwind, given concerns that President Trump's expansionary policies will push up inflation.

Traders may also await the release of Friday's U.S. Nonfarm Payroll (NFP) report, which could provide further clues about the Fed's rate-cutting path and influence near-term USD price trends. It should have an impact. This, in turn, suggests that a significant decline in USD/CAD could be seen as a buying opportunity and may remain limited.