- USD/CAD depreciates as the US Dollar struggles amid rising odds of Fed rate cuts.
- US inflation increased in July, a rise partly attributed to President Trump’s tariffs.
- The commodity-linked CAD may have come under pressure from weaker Oil prices.
USD/CAD loses ground for the fifth consecutive session, trading around 1.3740 during the Asian hours on Monday. The pair depreciates as the US Dollar (USD) faces challenges amid rising bets of an interest rate cut by the US Federal Reserve (Fed) in the September meeting. However, the volumes are expected to be low as the United States (US) and Canadian markets will observe the Labor Day holiday on Monday.
San Francisco Fed President Mary Daly said on Sunday that policymakers will be ready to cut interest rates soon, adding that inflation stemming from tariffs will likely prove temporary, per Bloomberg.
Friday’s data showed that United States (US) inflation rose in July, which could be attributed to US President Donald Trump’s tariffs. US Personal Consumption Expenditures (PCE) Price Index held steady at 2.6% year-over-year in July, coming in line with the market expectation. The US core PCE Price Index, which excludes volatile food and energy prices, rose 2.9% YoY in July, as expected, following June’s increase of 2.8%. On a monthly basis, the core PCE Price Index rose 0.2% and 0.3%, respectively.
The US Court of Appeals for the Federal Circuit upheld a ruling that the sweeping tariffs the US President Donald Trump unilaterally imposed on most other countries were illegal, CNN reported on Friday. US Trade Representative Jamieson Greer said in a Fox News interview on Sunday that US President Donald Trump’s administration will likely continue negotiations with its trade partners despite a US court ruling.
The downside of the USD/CAD pair could be restrained as the commodity-linked Canadian Dollar (CAD) could have faced challenges amid weaker Oil prices. It is noteworthy that Canada is the largest Oil exporter to the United States (US).
West Texas Intermediate (WTI) Oil price extends its losses for the second successive session, trading around $63.50 per troy ounce at the time of writing. Crude Oil prices struggle due to prevailing oversupply concerns and weaker demand prospects.
