Weaker crude prices and reduced Fed rate hike expectations weigh on the CAD, lifting the pair to multi-day highs.
The USD/CAD pair climbed to 1.4080, its highest level this week, as the Canadian dollar weakened amid a sharp drop in oil prices. Brent crude fell below $80, hitting three-week lows on hopes of a diplomatic resolution to the US-Iran conflict, pressuring Canada’s export-driven currency.
The decline in oil offset a stronger-than-expected Canadian merchandise trade surplus, which reached a four-year high in June. Meanwhile, softer US economic data, including a larger-than-expected drop in JOLTS job openings and weaker factory orders, dampened expectations for Federal Reserve tightening. Markets now price a 58% chance of a September rate hike, down from 67% a day earlier.
Technical indicators suggest bullish momentum for USD/CAD, with the 4-hour RSI rising above 58 and the pair approaching a triangle pattern resistance.