Anna 
USD/CAD maintained its position at a two-week low as traders awaited the release of significant data reports, with the Canadian dollar (CAD) exhibiting a 0.27% gain on Tuesday. The depreciation of the U.S. dollar was attributed to lower-than-anticipated U.S. Purchasing Managers’ Index (PMI) figures.
Over the past week, USD/CAD has experienced a decline of nearly 2%, driven by risk-off sentiment in the U.S. dollar amid diminishing concerns of a broader conflict in the Middle East. Concurrently, the price of Brent crude oil, a primary Canadian export commodity, has remained above $84 per barrel. Fundamentally, the pressure on USD/CAD remains bullish, fueled by market expectations of a more dovish monetary policy stance from the Bank of Canada (BOC) compared to the Federal Reserve (Fed) in 2024.
Market sentiment reflects a 100% likelihood of a rate cut by the BOC in July, while the Fed is not anticipated to commence reducing the base rate until September. Moreover, a majority of economists in the latest Reuters poll suggest that the BOC may initiate monetary easing even sooner, with projections indicating the possibility of the first rate cut occurring in June. Should the BOC decide to implement interest rate cuts in June, traders should brace themselves for a robust rally in USD/CAD.
USD/CAD exhibited marginal movement during the Asian and early European trading sessions. Today, the unveiling of two crucial macroeconomic reports may trigger notable volatility in the USDCAD pair. Statistics Canada is set to release its monthly Retail Sales report at 12:30 p.m. UTC, alongside the U.S. Census Bureau’s publication of the Durable Goods Orders report. A scenario where Canadian retail sales figures outperform expectations and U.S. goods orders disappoint could lead to a sharp decline in USDCAD. Alternatively, the short-term bearish trend may reverse if the data releases deviate from expectations. Key levels to monitor are 1.36000 and 1.37000.
