- USD/CAD steadies ahead of the US ISM Services PMI release due later in the day.
- The commodity-linked CAD remains under pressure due to the weaker WTI price.
- Traders are turning cautious amid growing concerns about the Fed’s independence.
USD/CAD holds ground after two days of losses, trading around 1.3790 during the Asian hours on Tuesday. The pair moves little as the commodity-linked Canadian Dollar (CAD) struggles amid weaker crude Oil prices. Market participants will likely observe the US ISM Purchasing Managers’ Index (PMI) data later in the North American session.
West Texas Intermediate (WTI) Oil price remains steady after a three-day losing streak, hovering around $65.60 per barrel at the time of writing. Oil prices may further depreciate amid mounting concerns over a potential supply glut after the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, decided to increase production by 547,000 barrels per day in September.
The USD/CAD pair remains steady as traders adopt caution as the market sentiment turns cautious over rising concerns over the US Federal Reserve’s (Fed) independence. Fed Governor Adriana Kugler unexpectedly resigned on Monday. This event has provided US President Donald Trump an earlier-than-anticipated opportunity to influence the central bank. Trump may nominate a replacement potentially more aligned with his calls for lower rates.
However, the upside of the US Dollar (USD) could be limited amid rising odds of an interest rate cut by the US Federal Reserve (Fed) in September, following weaker labor market data that has heightened concerns over the US economic outlook. According to CME’s FedWatch Tool, markets are pricing in a 91.6% chance of a Federal Reserve rate cut next month.
