USD/CAD keeps wavering below 1.3970 ahead of the FOMC minutes

• The Dollar retreated from 1.3970 again but remains within previous ranges, above 1.3940.
• Upbeat IVEY PMI figures and higher Oil prices are providing some support to the Canadian Dollar.
• The main focus today is on the release of the minutes of the last Fed meeting.
   

The US Dollar is drifting lower against the Canadian Dollar on Wednesday after another rejection at the 1.3570 resistance area. pair, however, remains moving back and forth within the last two weeks' horizontal channel above 1.3940.

The Dollar is drawing support from the global risk aversion as the political uncertainty in France and Japan sent the Euro and the Japanese Yen tumbling this week. On the other hand, growing concerns of a prolonged shutdown of the US government are starting to hurt risk appetite and increase speculative demand for safe havens, including the US Dollar.

The highlight this week is the release of the minutes of the last Fed meeting, but they are unlikely to show anything new, other than the divergences among the monetary policy committee about the next steps. The market has already priced in a 25 bps rate cut in October, and the FOMC minutes are not expected to alter that view.

Fed policymakers staged their divergences on Tuesday. Minneapolis Fed President Neel Kashkari warned about a burst of high inflation if the bank lowers interest rates too quickly, while Stephen Miran, at the dovish end of the Government Board, reiterated that monetary policy needs to ease.

In Canada, September's IVEY PMI surprised on Wednesday, jumping to its highest reading in the last 15 months, at 59.8 from 50.1 in August, and beating expectations of a softer increase to 51.2.

These figures and the rebound in Oil prices, with the US benchmark WTI reaching one-week highs above $62.00 are providing some support to the Canadian Dollar, yet with upside attempts limited for now, as the risk-averse market keeps the US Dollar buoyed.