Ella 
The USD/CAD pair attracted some dip buying on the first day of the new week, but the follow-through was lacking and remained confined to the familiar range of the past week or so. Spot prices are now trading just below the 1.3700 mid-range, up less than 0.10% on the day amid a combination of bullish forces.
Crude oil prices fell on Monday, eroding some of last week’s strong gains on concerns about weak US consumer demand, which is seen as weakening the commodity-linked ruble. On the other hand, the US dollar (USD) held steady near its highest level since early May hit on Friday, as the Federal Reserve (Fed) unexpectedly took a hawkish stance, predicting only one rate cut in 2024. This was seen as another positive factor for USD/CAD.
Meanwhile, weaker-than-expected US consumer and producer price data released last week indicated that inflation is weakening. In addition, an unexpected drop in US import prices further boosted the outlook for domestic inflation. This, coupled with a sharp deterioration in US consumer sentiment in June, leaves the Fed’s first rate cut in September still hanging in the balance. This has hampered aggressive bets by USD bulls and could limit upside for USD/CAD.
Therefore, it would be prudent to wait for strong follow-through buying before positioning for further near-term appreciation in the pair. Traders are now looking forward to economic data on Monday, which includes Canadian housing starts and the Empire State Manufacturing Index from the US. These data, along with oil price dynamics, should help traders take advantage of short-term opportunities in USD/CAD.
