Ella 
USD/CAD is trading lower for a fourth day in a row, trading around 1.3735-1.3740 in early European trade on Thursday. Bearish traders are currently awaiting some follow-through selling below the 1.3720 area (or above the two-week low set on Wednesday) and then an extension of this week’s sharp pullback from around 1.3900 (or the highest level since October 2022).
Rising bets on the Federal Reserve (Fed) to step up interest rate cuts, coupled with weak U.S. economic data, triggered a new round of declines in U.S. Treasury yields. This in turn dragged the US dollar (USD) off the weekly peak set the day before and put downward pressure on USD/CAD. Still, the generally cautious sentiment may help limit any meaningful depreciation in the safe-haven dollar.
Against the backdrop of China’s economic woes, concerns about a possible recession in the United States and geopolitical risks posed by ongoing conflicts in the Middle East have weighed on investor sentiment. Crude oil prices were also weighed down by worries that a recession in the world’s two largest economies would weaken fuel demand, which could weaken demand for the commodity-linked Canadian dollar and provide support for the USD/CAD pair.
Market participants will now set their sights on the U.S. economic calendar, which includes weekly jobless claims data later in the morning in North America. Beyond that, U.S. bond yields and broader risk sentiment are likely to impact U.S. dollar demand, which, coupled with oil price dynamics, should provide some momentum for the USD/CAD pair. Market attention will then turn to Canada’s monthly employment data due on Friday.
