The USD/CAD pair continued its upward trend for a fourth consecutive day, reaching around 1.3900 during the Asian trading session on Monday. The Canadian Dollar (CAD) is under pressure due to declining oil prices, as Canada remains the largest crude oil supplier to the United States.
West Texas Intermediate (WTI) crude oil prices have fallen over 4%, currently hovering around $68.40. This drop follows easing geopolitical concerns after Israel’s airstrikes on Iran over the weekend, targeting missile and air defense sites in a less intense assault than initially expected.
In Canada, Statistics Canada reported a 0.4% increase in retail sales for August, reaching $66.6 billion. Gains were noted in four of nine subsectors, largely driven by motor vehicle and parts dealers. However, core retail sales, which exclude gasoline stations, fuel vendors, and motor vehicle and parts dealers, showed a 0.4% decline for August.
Investors will closely monitor Bank of Canada (BoC) Governor Tiff Macklem’s speech at The Logic Summit in Toronto on Monday, where he is scheduled to discuss key economic issues.
The rise in USD/CAD can also be linked to a stronger U.S. Dollar (USD), fueled by recent positive economic data, raising expectations that the Federal Reserve (Fed) may adopt a cautious approach in November.
The CME FedWatch Tool shows a 92.8% chance of a 25-basis-point rate cut by the Fed in November, with no anticipated move toward a larger 50-basis-point cut.
In U.S. economic news, the Michigan Consumer Sentiment Index rose to 70.5 in October, surpassing the expected 69.0 and up from 68.9. Additionally, durable goods orders decreased by 0.8% month-over-month in September, which was a smaller drop than the forecasted 1.0% decline.
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