The USD/CAD pair continues to drift lower for the second consecutive day, hitting a one-month low around the 1.3665-1.3660 area. The downward movement is driven by the prevailing bearish sentiment surrounding the US Dollar (USD). Dovish expectations from the Federal Reserve (Fed) regarding interest rate cuts in September are contributing to the decline in the USD Index (DXY), pushing it closer to its lowest level since January.
Despite some positive economic data, such as the improvement in the US Consumer Sentiment Index, the USD is facing selling pressure. The overall risk-on sentiment in the equity markets is also dampening demand for the safe-haven USD, leading to further losses in the USD/CAD pair. Technical factors and a potential decline in Oil prices could further influence the pair’s direction in the near term.
Investors are closely monitoring upcoming events such as the Canadian consumer inflation figures release, the FOMC meeting minutes, and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium. Geopolitical developments in the Middle East could also impact Crude Oil prices and, in turn, the USD/CAD pair.
Overall, the USD/CAD pair is under pressure due to dovish Fed expectations and a positive risk tone in the markets. Investors should keep a close eye on upcoming economic indicators and central bank events to gauge the future direction of the pair.
Analysis:
The USD/CAD pair is facing downward pressure due to dovish Fed expectations and a positive risk tone. Factors such as upcoming economic data releases and geopolitical developments could influence the pair’s direction in the near term. Investors should stay informed and monitor key events to make informed decisions about their investments.