• USD/CAD attracted some buying on Wednesday and moved away from a two-week low.
• Softer Canadian CPI report, sliding oil prices undermined the loonie and offered support.
• A goodish pickup in the USD demand further contributed to the modest intraday bounce.

The USD/CAD pair staged a modest bounce from the vicinity of mid-1.2800s, or a two-week low touched earlier this Wednesday and for now, seems to have snapped a three-day losing streak. The pair held on to its recovery gains following the release of Canadian consumer inflation figures and was last seen trading just above the 1.2900 mark during the early North American session.

Statistics Canada reported that the headline CPI decelerated sharply to 0.3% in June from the 1.4% previous, missing estimates by a big margin. The yearly rate, however, rose to its highest level since 1982 and came in at 8.1% for the reported month. The reading was well above the 7.7% recorded in May, though was slightly below the 8.4% estimates. More importantly, the Bank of Canada's Core CPI, which excludes volatile food and energy prices, rose 0.3% MoM in June and edged higher to 6.2% on a yearly basis, again well short of market expectations.

The softer CPI report might have dashed hopes for another supersized rate hike by the Bank of Canada. This, along with with a fresh leg down in crude oil prices, now down around 2% for the day, undermined the commodity-linked loonie and acted as a tailwind for the USD/CAD pair. Apart from this, a goodish intraday US dollar recovery from its lowest level since July 6 was seen as another factor that offered some support to the major. The uptick, however, lacked bullish conviction, warranting some caution before positioning for any meaningful appreciating move.

Technical levels to watch