Ella 
USD/CAD was trading slightly higher/lower during the Asian session on Friday, consolidating its recent recovery from sub-1.3600 levels (the three-month low hit last week). USD/CAD is currently trading around the 1.3700 mark, almost unchanged throughout the day, and remains on track to post its first weekly gain in the past six weeks.
The U.S. dollar continued to fluctuate higher after rebounding from a more than three-month low the day before, becoming a key factor boosting USD/CAD. The Conference Board’s leading index fell for the fourth consecutive month in June, pointing to a slowdown in U.S. economic growth. This comes after worries about slowing economic growth in China, the world’s second-largest economy, weakened investors’ appetite for riskier assets and strengthened the safe-haven dollar.
Meanwhile, a stronger dollar has dampened demand for U.S. dollar-denominated commodities, including crude oil prices. This in turn appears to weaken the commodity-linked Canadian dollar and further support USD/CAD. That said, the lack of strong follow-through buying warrants caution among bullish traders amid bets that the Federal Reserve will initiate interest rate cuts in September. Traders also appeared reluctant to trade ahead of Wednesday’s Bank of Canada (BOC) meeting, preferring to stay on the sidelines.
With risks ahead of a key central bank meeting, investors will take cues from Canada’s retail sales data on Friday, which, along with oil price dynamics, should influence Canadian dollar moves. In addition, Fed officials’ speeches and broader risk sentiment will drive demand for the US dollar, which will provide some significant momentum for USD/CAD and help generate short-term trading opportunities.
