The USD/CAD currency pair is experiencing slight losses, trading around 1.3885 during early European trading hours on Monday. However, the downside appears limited as falling crude oil prices may negatively impact the commodity-linked Canadian Dollar (CAD), potentially benefiting the pair. Traders are looking ahead to Bank of Canada (BoC) Governor Tiff Macklem’s speech today for further direction.
Meanwhile, the US Dollar (USD) is gaining strength, nearing a three-month high, supported by positive signals from the US economy and expectations that the Federal Reserve (Fed) will implement modest rate cuts later this year. Financial markets are pricing in a 97.7% probability of a 25 basis point cut in rates at the Fed’s November meeting, according to the CME FedWatch tool. Additionally, speculation surrounding Donald Trump’s potential victory in the upcoming presidential election is contributing to rising US bond yields, further bolstering the Greenback.
Investors are also closely monitoring upcoming economic data, including the advanced Gross Domestic Product (GDP) for the third quarter, set to be released on Wednesday. The Core Personal Consumption Expenditures (PCE) Price Index for September will be published on Thursday, with the highly anticipated Nonfarm Payrolls (NFP) report scheduled for Friday.
Crude oil prices have declined on Monday, driven by easing geopolitical tensions in the Middle East, which puts additional pressure on the CAD, as Canada is a major crude oil exporter to the United States. Furthermore, disappointing retail sales data from Canada has added to the selling pressure on the Loonie. Statistics Canada reported a 0.4% month-over-month increase in retail sales for August, a decline from the 0.9% rise in July and falling short of the expected 0.5% increase.
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