The USD/CAD currency pair continued its decline for the seventh consecutive session, trading around 1.3730 early Monday. This ongoing drop is linked to a stronger Canadian Dollar (CAD), driven by higher crude oil prices. Canada, a major crude oil exporter to the United States, benefits from these rising prices.
West Texas Intermediate (WTI) oil prices rose for the fourth day in a row, reaching $76.20 per barrel. This increase in crude oil prices is due to growing supply concerns, exacerbated by geopolitical tensions in the Middle East.
ABC News reported that early Monday, the Israel Defense Forces (IDF) intercepted about 30 projectiles that crossed from Lebanon into northern Israel. The IDF noted that some projectiles landed in open areas, and there were no reported injuries.
On Saturday, the situation in Gaza worsened when an Israeli airstrike hit a school compound, resulting in at least 90 deaths, according to the Gaza Civil Emergency Service. Israel has disputed this number, calling it inflated. Hamas has also shown uncertainty about resuming ceasefire negotiations, as reported by Reuters.
Despite the USD/CAD pair’s decline, the US Dollar (USD) could gain support as recent positive US economic data has led traders to lower their expectations for rate cuts by the US Federal Reserve. The CME FedWatch Tool now shows a 46.5% chance of a 50-basis point rate cut by the Fed in September, down from the 74.0% probability reported a week earlier.
On Sunday, Federal Reserve Governor Michelle Bowman highlighted persistent inflation risks and robust labor market conditions. She indicated that the Federal Reserve may not be ready to cut rates at its next meeting in September, according to Bloomberg.