Canadian Dollar - USD/CAD On Wednesday's Asia session, this currency pair experienced significant buying action and rose from its previous weekly low around 1.3200. The spot price is currently trading around 1.3230-1.3235, reflecting an increase of about 0.10% on the day. This increase is supported by a combination of several factors.

One factor supporting the rise is concerns about global economic slowdown that may reduce fuel demand. This results in expectations of tighter supply, as Saudi Arabia and Russia, two major oil exporters, have announced production cuts. These production cuts act as a catalyst for higher crude oil prices.

In addition to the aforementioned factors, there are other factors contributing to the support for the USD/CAD currency pair. One of them is weak economic data from Canada last week, especially consumer inflation data, which showed a negative response as it fell to its lowest level in almost two years in May. This led to a weakening of the Canadian Dollar (CAD), particularly because CAD is closely tied to commodity prices.

Moreover, the relative strengthening of the US Dollar (USD) against other currencies also contributes to making the USD/CAD currency pair more attractive. The prospect of a more hawkish monetary policy from the Federal Reserve (Fed) in the US, with signals that borrowing costs may rise by 50 basis points by the end of this year, along with growing expectations of a 25 bps rate hike in the July FOMC meeting, also supports the rise in US Treasury yields.

This helps provide support for the US Dollar (USD), although there are still limitations on the upside due to uncertainties regarding the Fed's interest rate hike policy. Recent weak economic data from the US has raised questions about how far the Fed will continue its tightening monetary policy cycle.

Therefore, market attention will remain focused on the release of the minutes of the June FOMC meeting, which will be released later in the US trading session. Investors will be looking for new clues regarding the Fed's monetary policy outlook, which could provide significant momentum for the USD ahead of the US monthly Non-Farm Payrolls (NFP) report on Friday. This may also create short-term trading opportunities in the USD/CAD currency pair.

On the following Wednesday, traders will pay attention to signals given by the oil industry executive meeting with energy ministers from OPEC and oil-producing nations.

With the previously mentioned fundamental backdrop, there seems to be a slight inclination in favor of traders who are bullish. However, it would be wiser to wait for a follow-up from the strong buying action before positioning oneself to begin the recent recovery from the yearly low reached last week.

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