USD/CAD steadies below 1.3250 ahead of FOMC minutes

• Annual CPI in Canada rose to 2.4% in January.
• US Dollar Index stays at fresh multi-year highs near 99.70.
• FOMC to release the minutes of its January meeting at 19 GMT.

The USD/CAD pair fluctuated sharply during the first half of the American session but steadied in the negative territory near 1.3230 as investors seem to be staying on the sidelines while waiting for the FOMC to release the minutes of its January monetary policy meeting. As of writing, the pair was down 0.17% on the day at 1.3233.

Earlier today, the data published by Statistics Canada showed that inflation, as measured by the Consumer Price Index (CPI), rose to 2.4% on a yearly basis in January from 2.2% and came in higher than the market expectation of 2.3%.

Although the initial market reaction dragged the pair to a session low of 1.3210, the broad USD strength forced it to reverse its direction.

DXY preserves bullish momentum

After the US Bureau of Labor Statistics reported that the annual core Producer Price Index (PPI) in January jumped to 1.7% from 1.1%, the US Dollar Index (DXY) extended its rally. Moreover, Housing Starts and Building Permits both beat analysts' estimates to provide an additional boost to the greenback and the DXY touched its highest level since May 2017 at 99.71. 

However, rising crude oil prices allowed the commodity-related CAD to stay resilient against the USD, causing the pair to stay in the negative territory. At the moment, the West Texas Intermediate is up 2.3% on the day at $53.30.

Investors are now waiting for the FOMC to publish the minutes of its January policy meeting.

Technical levels to watch for