- USD/CAD retreated after reaching a four-month high of 1.3958 on Friday.
- The US Dollar struggles as the August inflation report increased the likelihood of the Fed delivering a rate cut in October.
- The commodity-linked CAD may come under pressure as subdued crude prices follow the resumption of Kurdistan exports.
USD/CAD halts its five-day winning streak, trading around 1.3920 during the Asian hours on Monday. The pair retreated after reaching a four-month high of 1.3958 on Friday as the US Dollar (USD) lost ground after the US August inflation report boosted the likelihood that the US Federal Reserve (Fed) will likely deliver another interest rate cut in October.
The US Personal Consumption Expenditures (PCE) Price Index rose 2.7% year-over-year in August, as expected. The precious reading was a 2.6% increase. Meanwhile, the core PCE, which excludes food and energy prices, came in at 2.9% YoY during the same period, also matching expectations.
The Greenback also faces challenges due to market caution amid shutdown risks of the United States (US) government. US President Donald Trump will meet congressional leaders on Monday to discuss government funding. Without a deal, a shutdown could begin on October 1, coinciding with new tariffs on trucks, pharmaceuticals, and more. The standoff could also delay the September payrolls report and other key data, per Reuters.
The downside of the USD/CAD pair could be restrained as the commodity-linked Canadian Dollar (CAD) may face challenges amid subdued Crude Oil prices. West Texas Intermediate (WTI) Oil price hovers around $65.00 per barrel at the time of writing.
Oil prices slipped after Iraq’s Kurdistan region resumed exports following a 2.5-year halt, adding supply to a market facing surplus risks. Under a new deal with Baghdad, the Kurdistan Regional Government, and international Oil firms, 180,000–190,000 barrels per day (bpd) will initially flow to Turkey’s Ceyhan port.
