USD/CAD hovers above 1.3700 major level after trimming intraday losses

USD/CAD retraces intraday losses, trading around 1.3710 during the European session on Monday. The pair gains ground as the US Dollar treads waters to halt the recent losses, driven by higher US Treasury yields. Additionally, increased risk aversion, stemming from the Israel-Hamas military situation, contributes to the USD/CAD pair's gains.

However, the bearish trend in Crude oil prices, which weighs on the commodity-linked Loonie, advances further losses in the USD/CAD pair.

Western Texas Intermediate (WTI) oil price drops for the second successive day, trading lower around $87.40 per barrel during the European session on Monday.

Investors await the Bank of Canada (BoC) Interest Rate Decision on Wednesday, with expectations that the interest rate will be maintained at 5.0%. The market is expecting the BoC to keep the interest rate unchanged for the rest of the year. Furthermore, there are anticipations of a rate cut in the second quarter of 2024.

Mixed remarks from US Federal Reserve (Fed) officials on the trajectory of interest rates may contribute to pressure on the USD/CAD pair. Atlanta Fed President Raphael Bostic indicated that the Federal Reserve is unlikely to lower interest rates before the middle of next year, and Fed Philadelphia President Patrick Harker expressed a preference for maintaining unchanged interest rates.

Moreover, Federal Reserve (Fed) Chairman Jerome Powell clarified in the previous week that the central bank is not planning an immediate rate hike, emphasizing the potential for further tightening of monetary policy in response to signs of growth.

The US Dollar Index (DXY) trims intraday gains, trading lower around 106.10, the index had earlier received upward support from positive momentum in US Treasury yields. The 10-year US Treasury yield stands at 4.99%, up by 1.65% at the time of writing.

Investors are likely to keep a close eye on the US S&P Global PMI on Tuesday and the Q3 Gross Domestic Product (GDP) on Thursday for potential market-moving insights into the US economic landscape.