Ella 
USD/CAD continues to consolidate on the first trading day of the week, affected by multiple conflicting factors. Spot prices are currently trading with a mild positive bias around 1.3735, but are still well off the multi-week lows hit last Friday.
Mixed Canadian employment data released on Friday weighed on the Canadian dollar, which coupled with a slight rise in the U.S. dollar (USD), was bullish for the currency pair. Statistics Canada reported that the number of employed people fell by 2,800 in July, the unemployment rate remained stable at 6.4%, and average hourly earnings increased by 5.2% annually. Nonetheless, the data reaffirmed market expectations that the Bank of Canada (BOC) will cut interest rates by another 25 basis points (bps) in September and weakened the Canadian dollar.
On the other hand, the US dollar (USD) has attracted some safe-haven inflows due to heightened geopolitical tensions, becoming another factor supporting the USD/CAD pair. Still, bets that the Federal Reserve will cut interest rates more aggressively have stymied aggressive bets by dollar bulls. Additionally, the risk of supply disruptions in the Middle East – amid risks of wider conflict in the region – helped crude oil prices hold steady near one-week highs, providing some support to the commodity-linked Canadian dollar and lifting the pair’s A cap is set.
With neither the U.S. or Canada releasing any market-moving economic data on Monday, caution is warranted before positioning for any meaningful gains against the backdrop of the above fundamentals. Traders also seemed reluctant, preferring to wait for this week’s U.S. inflation data – the Producer Price Index (PPI) and Consumer Price Index (CPI) to be released on Tuesday and Wednesday respectively.
