• USDCAD remains sidelined after rising the most in a month, bouncing off seven-week low.
• Oil bears cheer China’s covid woes, higher inventories at monthly low.
• Cautious optimism defends sellers but challenges to risk, fears of higher inflation keep buyers hopeful.
• US CPI for October, comments from BOC Governor Macklem will be crucial for clear directions.

USDCAD aptly portrays the pre-data/event anxiety as it seesaws near 1.3530 during early Thursday. In doing so, the Loonie pair justifies the market’s cautious mood ahead of the US Consumer Price Index (CPI) for October and a speech from the Bank of Canada (BOC) Governor Tiff Macklem. Also restricting the quote’s latest moves could be the inaction of Canada’s main export item, namely the WTI crude oil.

That said, the quote bounced off the lowest levels in two months the previous day as risk-aversion joined softer oil prices. However, downbeat comments from the US Federal Reserve (Fed) officials and a shift in the sentiment joined the pre-data/event caution to limit the USDCAD moves afterward.

Fears emanating from China’s coronavirus conditions joined the chatters over the US government gridlock, due to the midterm elections, to weigh on the market sentiment the previous day, which in turn favored the USDCAD bulls.

China marked the biggest daily jump in covid numbers in six months and also announced a fresh lockdown in one more district of Guangzhou. On the other hand, a tug-of-war between Democrats and Republicans raises fears of government gridlock.

Elsewhere, the New York Federal Reserve (Fed) President John Williams made some comments on inflation expectations in the text of a speech to be delivered to an audience in Zurich. “Relatively stable long-term inflation expectations are good news,” stated the policymaker. On the same line, Richmond Fed President Thomas Barkin also mentioned that the Fed’s fight against inflation may lead to a downturn in the US economy but that is a risk that the Fed will have to take.

Headlines surrounding Russia also seemed to have favored the latest cautious optimism as Russia appears to retreat from the only Ukrainian regional capital captured, namely Kherson, whereas President Vladimir Putin is less likely to attend the upcoming G-20 summit in Bali, starting from November 15.

Further, the US inflation expectations per the 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, dropped to the lowest levels since October 20, to 2.53% versus 2.61% prior, which in turn exerted downside pressure on the USDCAD prices.

It’s worth mentioning that the fears of less demand from China, the world’s largest commodity user, mainly due to covid, joined the higher weekly oil inventory data to weigh on the oil prices. However, the recently softer US dollar restrict the black gold’s downside.

Moving on, USDCAD traders may witness a sluggish session amid the downbeat forecasts for the US inflation data, as well as amid fears of hearing dovish comments from BOC Governor Macklem.

Technical analysis

Unless providing a daily closing below a three-month-old ascending support line, near 1.3415 by the press time, USDCAD remains on the buyer’s radar.