Canadian Dollar advances due to softer US Dollar, higher oil prices
USD/CAD extends its losses for the third consecutive day, trading around 1.3870 during the Asian hours on Monday. The pair depreciates as the US Dollar (USD) declines amid weaker-than-expected US economic data and shifting central bank expectations.
The Canadian Dollar advanced as the US Dollar weakened and oil prices rose. The US Dollar (USD) fell on Friday due to weaker-than-expected economic data and shifting central bank expectations. Retail Sales in the US declined by 0.6% month-over-month in July, falling short of market expectations. This, coupled with a lower chance of a Federal Reserve rate hike next month, 33.1% according to the CME FedWatch tool, contributed to the USD's depreciation.
Meanwhile, West Texas Intermediate (WTI) oil prices rose for the second consecutive day, trading around $81.80 per barrel, spurred by Middle East tensions. As Canada's largest export, higher oil prices support the Canadian Dollar (CAD). The Bank of Canada (BoC) influences the CAD by setting interest rates, aiming for 1-3% inflation. With higher oil prices and potential rate hikes, the CAD strengthens.
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