- USD/CAD loses ground as the downbeat economic data reinforce the expectations of the Fed rate cuts.
- The commodity-linked CAD could face challenges amid weaker crude Oil prices.
- WTI price faces challenges due to expectations of resumed exports from Kurdistan’s oilfields.
USD/CAD offers its recent gains registered in the previous session, trading around 1.4190 during the Asian hours on Monday. The downside of the pair is attributed to the weaker US Dollar (USD) following the downbeat US economic data including Jobless Claims and the S&P Global Purchasing Managers’ Index (PMI) released last week.
The downbeat economic data have reinforced the expectations of the Federal Reserve’s (Fed) rate cuts. The US Dollar Index (DXY), which measures the USD against six major currencies, depreciates to near 106.00 with 2- and 10-year yields on US Treasury bonds standing at 4.19% and 4.43%, respectively, at the time of writing.
In Canada, mixed economic data has created uncertainty around the Bank of Canada’s (BoC) policy outlook. An advance estimate from Statistics Canada indicates that Retail Sales fell by 0.4% in January 2025, marking the first decline in seven months. This suggests a slowdown in consumer spending following December’s strong surge, sparking concerns about economic momentum.
Meanwhile, inflationary pressures remain elevated, with rising industrial producer prices and an increase in the Raw Materials Price Index month-over-month. This underscores the BoC’s challenge of balancing economic growth and price stability, while also dampening expectations for further policy easing.
However, the commodity-linked Canadian Dollar (CAD) could face challenges amid weaker West Texas Intermediate (WTI) Oil price. Given that Canada is the largest Oil exporter to the United States (US). Crude Oil prices faced downward pressure amid expectations of resumed exports from Kurdistan’s Oilfields.
On Sunday, Reuters reported that an Iraqi Oil ministry official confirmed Iraq’s plan to export 185,000 barrels per day (bpd) from Kurdistan’s Oilfields via the Iraq-Turkey pipeline. The ministry stated that all necessary procedures had been completed to facilitate the resumption of exports through the pipeline.
