- USD/CAD oscillates in a range and is influenced by a combination of diverging forces.
- The recent strong rally in Oil prices underpins the Loonie and caps gains for the major.
- Fed rate cut expectations keep the USD bulls on the defensive and act as a headwind.
The USD/CAD pair struggles to capitalize on the previous day's positive move and seesaws between tepid gains/minor losses, below mid-1.3700s during the Asian session on Friday.
Crude Oil prices attract some dip-buying and remain on track to register strong weekly gains on the back of OPEC+ assurance to keep production low to support prices, which helped ease concerns about higher supplies. OPEC+ further clarified that any increase in production would be largely dependent on Oil prices and also maintained its annual demand growth forecast, citing improved prospects in the wake of eventual lowering in global interest rates. This, in turn, continues to lend support to the black liquid, which underpins the commodity-linked Loonie and acts as a headwind for the USD/CAD pair.
The US Dollar (USD), on the other hand, stalls its goodish rebound from the weekly low touched on Wednesday in the wake of expectations that the Federal Reserve (Fed) could start cutting interest rates as soon as September. The bets were lifted by this week's softer inflation figures, which dragged the US Treasury bond yields to their lowest level since April. This, in turn, keeps the USD bulls on the defensive and turns out to be another factor that contributes to capping gains for the USD/CAD pair.
Meanwhile, the Fed adopted a more hawkish tone at the conclusion of the June policy meeting on Wednesday and now sees only one interest rate cut in 2024. This could help limit the downside for the US bond yields and the Greenback, which is seen holding back traders from placing aggressive bearish bets around the USD/CAD pair. Traders now look to the release of the Preliminary Michigan US Consumer Sentiment Index, which, along with Oil price dynamics, should provide a fresh impetus.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD sticks to recovery gains above 1.1500 amid US Dollar pullback
EUR/USD holds its winning streak for the third successive day, holding firm above 1.1500 in the European session on Friday. The pair recovers as the US Dollar loses ground, possibly driven by a technical pullback and receding fears over a likely US military attack on Iran. Geopolitics remain in focus.
GBP/USD holds the rebound near 1.3500 despite weak UK Retail Sales data
GBP/USD has found demand and retakes 1.3500 in European trading on Friday. The pair seems to have ignored the downbeat UK Retail Sales data for May. Broad US Dollar weakness, amid easing Middle East tensions, keeps the major underpinned.
Gold price struggles near weekly low amid fewer Fed rate cut bets, despite Middle East tensions
Gold price is seen consolidating its intraday losses to over a one-week low and trades just below the $3,350 level during the first half of the European session. The US Federal Reserve earlier this week trimmed the outlook for rate cuts in 2026 and 2027, which is seen acting as a tailwind for the US Dollar and undermining demand for the non-yielding yellow metal.
Shiba Inu Price Forecast: SHIB demand wanes as holders offload meme tokens
Shiba Inu (SHIB) extends its decline at the time of writing on Friday after dropping nearly 5% so far this week. The on-chain data supports a correction ahead, as SHIB holders are unloading tokens amid the escalating Iran-Israel war.
In the Eurozone, inflation is also a monetary phenomenon
Monetary aggregates continue to be closely monitored by the European Central Bank (ECB), a sign that, despite the passage of time and the increasing complexity of financing circuits, quantitative theory remains relevant.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.