As the USD/CAD pair continues its upward momentum for the seventh consecutive day on Thursday, investors are closely watching the impact of recent developments in the market. The rise in spot prices to the highest level since April 17, around the 1.3820 region, is driven by a combination of factors that are worth considering.
The recent fall in Oil prices, coupled with the Bank of Canada’s (BoC) dovish outlook, has put pressure on the Loonie and provided a boost to the USD/CAD pair. The BoC’s decision to lower its key policy rate by 25 basis points for the second consecutive month, along with a downward revision in growth forecasts, has raised concerns among investors.
Market sentiment is also influenced by expectations of further rate cuts by the BoC in the coming months, leading to a higher probability of interest rate adjustments at the next monetary policy meeting in September. This, combined with a softer USD, has contributed to the bullish trend in the USD/CAD pair.
Looking ahead, traders are cautious ahead of the release of key US macro data, including the Advance US Q2 GDP print and the Personal Consumption Expenditures (PCE) Price Index. These data points will play a crucial role in shaping the Fed’s policy path and could impact the demand for the USD.
Overall, the dynamics of Oil prices, the BoC’s monetary policy decisions, and the upcoming US macro data releases are key factors to watch in the USD/CAD pair’s movement. Understanding these factors and their implications can help investors make informed decisions and navigate the ever-changing landscape of the financial markets.