The USD/CAD currency pair is currently in a consolidation phase after a recent surge, now trading below the 1.3500 mark in early Monday's Asian session. Weakened U.S. Dollar and falling Treasury yields are weighing on the pair, with USD/CAD trading around 1.3476, down 0.05% today.

Canadian retail sales data for July, released last Friday, showed a 0.3% increase, which is lower than the previous 0.1% growth and fell short of the market's 0.4% expectations. However, Core Retail Sales rose by 1.0%, surpassing both the previous -0.7% and market expectations of 0.5%.

The rise in oil prices is supporting the oil-linked Canadian Dollar, which may limit the strength of USD/CAD since Canada is a major oil exporter to the U.S.

On the other side, Federal Reserve officials, including Susan Collins and Mary Daly, emphasized that while inflation has been easing, further interest rate hikes are still necessary. This expectation of higher rates for a longer period has boosted the USD, which could support the USD/CAD pair.

In the U.S., Friday's S&P Global Manufacturing PMI showed improvement, rising to 48.9 in September from 47.9 in August, though still indicating contraction in the manufacturing sector. The Services PMI fell slightly to 50.2, down from 50.5, while the Composite PMI dropped to 50.1 from 50.2.

Investors are now focusing on Canada's GDP data for July, which will be released on Friday, along with the U.S. Core Personal Consumption Expenditures (PCE) index—a key inflation measure for the Federal Reserve. The annual PCE forecast shows a decline from 4.2% to 3.9%. These events could significantly impact the future direction of the USD/CAD pair.

Also Read :

USD vs CAD Surges Amid Threat of Low Oil Prices

Forex Today: BoC Inflation Pushes USD/CAD to Surge



Warning!

This analysis is based on fundamental and technical perspectives from reliable sources and should not be considered as advice or an invitation. Always remember that this content is intended to enrich the reader's information. Always conduct independent research on other forex information to use as a reference in your trading.

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