Anna 
The Canadian dollar (CAD) exhibited sideways movement on Monday, influenced by declining oil prices, which is a key Canadian export commodity.
The drop in oil prices has weighed on the Canadian dollar due to Canada’s significant oil exports, closely linking the currency to commodity markets. Furthermore, a hawkish tone from US Federal Reserve (Fed) policymakers has intensified the bearish sentiment surrounding CAD. Fed Governor Michelle Bowman highlighted ‘upside risks’ to inflation, while Minneapolis Fed President Neel Kashkari indicated no anticipated rate cuts for this year. Additionally, Atlanta Fed President Raphael Bostic suggested openness to rate hikes if inflation continues to rise. These hawkish remarks bolstered the greenback, resulting in an uptick in USD/CAD.
In terms of Canadian interest rate expectations, traders foresee the Bank of Canada (BOC) potentially initiating interest rate cuts as early as June or July.
USD/CAD saw gains during Asian and early European trading sessions. Today’s release of the monthly Gross Domestic Product (GDP) data for February at 12:30 p.m. UTC may provide crucial insights into the Canadian economy’s performance. A weaker-than-expected GDP report could prompt the BOC to consider earlier rate cuts, thereby weakening the Canadian dollar. Conversely, if the data exceeds expectations, it may bolster the currency. Moreover, continued declines in oil prices could further exert downward pressure on CAD.
