Weaker US retail sales and Fed rate hike doubts weigh on the USD, while rising oil prices support the commodity-linked Canadian Dollar.
USD/CAD extended its decline for a third straight session, trading near 1.3870 in Asian hours Monday. The pair dropped as the US Dollar weakened following softer-than-expected US economic data, including a 0.6% month-over-month decline in July retail sales, below the 0.1% growth consensus.
Traders scaled back expectations for Federal Reserve rate hikes after recent data, with markets pricing a 33.1% chance of a September hike, down from 44% last week. Meanwhile, the Canadian Dollar found support from rising oil prices, with WTI crude trading around $81.80 per barrel amid Middle East tensions and supply concerns.
Commerzbank analysts warned of a tightening global oil balance due to Gulf outages, further bolstering crude prices and the CAD.