Ella 
In early European trading on Monday, although there was a lack of downside momentum around 1.3595-90, USD/CAD retreated from a three-month high driven by a pullback in the US dollar, while showing little reaction to the weakening of WTI crude oil prices, Canada’s main export item , while sentiment is slightly more positive ahead of this week’s top US and Canadian data/events.
The U.S. dollar index fell back to around 104.05, its highest level since June 1, while WTI crude oil ended a two-session rally to $79.65.
The hesitant, hawkish comments came as central banks around the world defended their respective restrictive monetary policies. Among them, speeches by Federal Reserve Chairman Jerome Powell (Jerome Powell) received much attention, as he reiterated his defense of raising interest rates in the “long term”, while saying that the policy is restrictive, but the Fed cannot determine the level of neutral interest rates how many. The policymaker added that much work remains to be done to restore price stability, while adding that economic uncertainty calls for flexibility in monetary policy.
Elsewhere, the introduction of another measure to boost economic activity in China by halving the current 0.1% stamp duty on stock trades also helped sentiment and weighed on the dollar in the near term. The Wall Street Journal (WSJ), citing people familiar with China’s decision-making process, said Chinese Communist Party Chairman Xi Jinping’s deep-seated opposition to Western-style consumption-driven growth points to more stimulus to come.
However, it is worth pointing out that crude oil bulls need more to defend their previous gains, while concerns about China are mixed, and discussions around Sino-US trade negotiations and a weakening Chinese economic recovery are not conducive to oil prices.
In this context, the S & P 500 index futures held on to the previous day’s rebound from a one-week low to 4420 points, up 0.10% on the day, and the yield on the US 10-year Treasury bond was close to 4.23%, after ending four weeks of gains. The highest level fell back and closed slightly lower.
Light data and preparations for this week’s top events/data could keep USD/CAD under pressure. The main focus, though, will be growth data from Canada and the Fed’s favored inflation gauge – the core PCE price index for July and the non-farm payrolls report for August.
