Ella 
USD/CAD has started the new week on a subdued note and is still trading near the two-week low set on Friday. However, spot prices were able to hold above the psychological 1.3500 mark during the Asian session, but struggled to attract any meaningful buying after the US dollar (USD) weakened slightly.
Positive risk sentiment, buoyed by optimism about more stimulus from China, kept the safe-haven dollar on the defensive below its highest level in more than six months hit last week. Beyond this, rising oil prices continue to support the commodity-linked Canadian dollar and put pressure on the USD/CAD currency. Oil prices rose on hopes of a recovery in fuel demand in China, the world’s top oil importer, amid worries about tightening global supplies.
However, traders appear reluctant to place aggressive bearish bets around the dollar, preferring to stay on the sidelines ahead of key central bank event risks this week. The Federal Reserve (Fed) is due to announce its decision at the end of a two-day policy meeting starting on Wednesday, and is expected to keep interest rates unchanged. Meanwhile, markets still believe the Fed is likely to raise interest rates by another 25 basis points before the end of the year. The focus will therefore be on the accompanying policy statement.
Investors will further scrutinize Federal Reserve Chairman Jerome Powell’s remarks at the post-meeting press conference for new clues on the Fed’s path to future interest rate hikes, which in turn will have a key impact on near-term U.S. dollar price dynamics. Meanwhile, the downside for USD/CAD is likely to be restrained as neither the U.S. or Canada releases any relevant market-moving economic data on Monday.
