Ella 
USD/CAD retreated after two days of gains and traded around 1.3680 in Asian session on Thursday. The US dollar (USD) struggled after mixed economic data released from the United States fueled speculation of a rate cut by the Federal Reserve (Fed). Investors are awaiting key US employment data, including average hourly earnings and non-farm payrolls, to be released on Friday.
Investor sentiment on a Fed rate cut led to lower US Treasury yields, weakening the dollar and USD/CAD currency pairs. Investors are awaiting key US employment data, including average hourly earnings and non-farm payrolls, to be released on Friday.
Nearly two-thirds of economists now predict a rate cut in September, according to a Reuters poll conducted between May 31 and June 5. The probability of a Fed rate cut of at least 25 basis points in September rose to nearly 70.0% from 47.5% a week ago, according to the CME FedWatch tool.
On the Canadian dollar front, rising crude oil prices supported demand for the Canadian dollar as Canada is the largest oil exporter to the United States. West Texas Intermediate (WTI) crude oil prices extended gains for the second consecutive trading day, trading around $74.30 per barrel at press time.
The Bank of Canada (BOC) cut its key interest rate by 25 basis points to 4.75% in June, as widely expected. The move marks Canada’s exit from an 11-month interest rate peak in the tightening cycle. Canada’s deflationary trend continues to move towards the central bank’s target range of 1%-3%, which supports the central bank’s looser monetary policy stance. Traders are now turning their focus to the Canadian labor force data due on Friday.
