- USD/CAD depreciates as the Canadian Dollar gains ground amid strengthening Oil prices.
- Canada’s Finance Ministry announced the withdrawal of proposed digital services tax to advance broader trade negotiations with the US.
- Traders await US labor market data to gain further impetus on the Fed’s policy stance.
USD/CAD loses ground, trading around 1.3670 during the Asian hours on Monday. The Canadian Dollar (CAD) gains ground following the statement from Canada’s Finance Ministry on Sunday that it will rescind the digital services tax to advance broader trade negotiations with the United States (US). Canada’s PM Mark Carney and President Donald Trump agreed that parties will resume negotiations to agree on a deal by July 21.
The USD/CAD pair depreciates as the commodity-linked Canadian Dollar (CAD) receives support from improving Oil prices. This is important to note that Canada is the largest crude exporter to the United States (US).
West Texas Intermediate (WTI) Oil price is trading around $64.70 per barrel at the time of writing. However, the upside of the Crude Oil prices could be limited amid easing fears over supply disruptions, driven by the Middle East ceasefire. Meanwhile, President Donald Trump noted that he might support sanctions relief on Iran if it can be peaceful. Moreover, reports indicated that OPEC+, the Organization of the Petroleum Exporting Countries and its allies, was prepared to increase production by 411,000 barrels per day in August, following a similar hike already planned for July.
The upside of the USD/CAD pair could be restrained as the US Dollar (USD) struggles, as traders expect that the Federal Reserve (Fed) will cut rates at the September meeting. Data showed on Friday that US Personal Spending unexpectedly fell in May, the second decline this year. Meanwhile, US Personal income dropped by 0.4% in May, the largest decrease since September 2021.
A slew of key US employment figures is scheduled to be released later in the week, which may further offer fresh impetus on the US Federal Reserve’s (Fed) policy outlook. The June US payrolls report is expected to show the economy added 110,000 new jobs, down from 135,000 in May – the estimate range is currently between a high of 140,000 and a low of 75,000. Moreover, Unemployment is anticipated to tick higher to 4.3% from 4.2%.
