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During early European trading on Monday, the USD/CAD pair was trading with modest losses near 1.3885. Still, the downside appears limited as falling crude oil prices could weigh on the commodity-linked Canadian dollar (CAD) and create tailwinds for the pair. Traders will focus on comments from Bank of Canada (BOC) Governor Mark Lame on Monday for fresh impetus.
The U.S. dollar (USD) is trading higher near a three-month high on signs of strength in the U.S. economy and bets that the Federal Reserve will cut interest rates slightly this year. Financial markets have priced in a 97.7% chance that the Fed will cut prices by 25 basis points in November, according to the CME FedWatch tool. In addition, bets on Donald Trump winning the U.S. presidential election have lifted U.S. bond yields and also provided support for the dollar.
Crude oil prices fell on Monday as geopolitical tensions in the Middle East eased, weakening the Canadian dollar as Canada is a major crude exporter to the United States. In addition, the lackluster retail sales in Canada in August also put some selling pressure on the Canadian dollar. Data released by Statistics Canada on Friday showed that retail sales fell to a monthly increase of 0.4% in August from an increase of 0.9% in July, which was lower than the market consensus of 0.5%.
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