Ella 
USD/CAD remained weak in Asia on Monday, trading around 1.3675. Signs of slowing inflation in the United States boosted the prospect of a rate cut by the Federal Reserve, weighing on the dollar. Investors will get more clues from the U.S. June ISM Manufacturing Purchasing Managers Index, which will be released on Monday.
Data released by the U.S. Commerce Department on Friday showed that the core PCE price index, the Federal Reserve’s (FED) preferred inflation indicator, rose 2.6% year-on-year from 2.8% in April, in line with expectations. Meanwhile, the annual rate of the U.S. PCE price index climbed from 2.7% to 2.6% in May, in line with expectations. Weak U.S. inflation data weighed on USD/CAD, which fluctuated lower. Mary Daly, president of the Federal Reserve Bank of San Francisco, said that the U.S. economy is slowing down, spending is slowing down, the labor market is slowing down, and inflation is falling.
On the Canadian dollar side, rising crude oil prices provided some support for the commodity-linked Canadian dollar (CAD). It is worth noting that rising oil prices may support the Canadian dollar because Canada is a major crude oil exporter to the United States.
In addition, Canada’s inflation level remained high in May, which cast doubts on the next interest rate decision of the Bank of Canada (BoC). Deloitte’s 2024 Summer Economic Outlook said that the Bank of Canada is expected to postpone the second rate cut until September and then cut again in December. The Bank of Canada is expected to continue cutting interest rates next year, and then the overnight interest rate will reach a neutral level of 2.75% by the end of next year.
