After climbing higher toward the 1.31 handle during the European trading hours, the USD/CAD came under modest bearish pressure as the CAD capitalized on rising crude oil prices and gathered strength against its rivals. 

U.S. President Donald Trump on Monday said that they were "ahead of schedule" with finalizing the phase-one of the trade deal with China and added that he was expecting to sign the deal at the APEC meeting in Chile in November to ease worries over a dismal demand outlook. The barrel of West Texas Intermediate rose to a fresh monthly high of $56.90 on these comments but erased its gains to return to the $56 area.

USD waits for FOMC

On the other hand, today's data from the United States revealed that the trade deficit narrowed to $70.4 billion in September from $73.06 billion in August. Other data showed that the Chicago Fed's National Activity Index slumped to -0.45 from 0.15 and the Dallas Fed Manufacturing Index dropped to -5.1 to miss the market expectation of 1.4.

The Greenback largely ignored the data and the US Dollar Index extended its sideways grind near the 97.70/80-area as investors seem to be refraining from making large bets ahead of Wednesday's critical Federal Open Market Committee (FOMC) meeting. 

Previewing the event, “Given the lack of pushback against that pricing by the recent parade of Fedspeak, it’s a relative safe prediction that they deliver another cut to take the fed funds target range to 1.50-1.75%,” said Deutsche Bank analysts.