Ella 
Entering the European session on Wednesday, USD/CAD remained at a low level near 1.3540, reflecting the downturn in the market this week.
The pair edged lower amid a weaker dollar and a recent improvement in WTI crude oil prices, Canada’s key export, as the market awaited top-line data from the U.S. and Canada.
However, the U.S. dollar index fell back to around 103.50 from the 10-week high recorded the day before. WTI crude oil ended its two-day losing streak and rose 0.20% to $79.75 during the session.
It is worth pointing out that market sentiment is cautiously optimistic, coupled with the fall in U.S. bond yields, also challenged the dollar bulls and supported the rebound in oil prices.
Among the main catalysts, U.S. Commerce Secretary Gina Raimondo is due to visit Beijing next week, suggesting a possible improvement in U.S.-China relations. Likewise, news broke earlier in the week that the United States removed 27 Chinese entities from its “unverified list,” lifting sanctions against them and heralding hopes for improved diplomatic relations.
In addition, mixed U.S. data and Fed talks also challenged the dollar index bulls, as market participants do not expect Federal Reserve Chairman Jerome Powell to deliver a hawkish speech at the annual Jackson Hole meeting this week. Nonetheless, U.S. existing home sales in July and the Richmond Fed manufacturing index in August improved slightly, which in turn should fuel USD/CAD bears. However, hawkish speeches from Richmond Fed President Thomas Barkin supported the pair.
In this context, the yield on the 10-year U.S. Treasury bond maintained its retracement to 4.31%, the highest level since the end of 2007 the day before, and the S&P 500 index futures rose 0.25% to recover 4410 points, reversing from a one-week high the day before yesterday.
Canadian June retail sales are expected to fall on a monthly basis, but core retail sales may improve, which may guide USD/CAD day traders, followed by US August PMI and July existing home sales data.
