USD/CAD consolidates its gains below the 1.3500 mark, focus on Canadian GDP, US PCE data
|- USD/CAD trades sideways near 1.3476 amid the USD weakness.
- Canadian Retail Sales for July rose by 0.3% vs. 0.1% prior; Core Retail Sales climbed by 1.0% vs. -0.7% prior.
- US S&P Global Manufacturing PMI showed an ongoing contraction in the manufacturing sector's business activity.
- The US Core Personal Consumption Expenditure (PCE) Price Index will be a closely watched event.
The USD/CAD pair consolidates its recent gains below the 1.3500 barrier during the early Asian session on Monday. The weakening of the US Dollar (USD) and a decline in the US Treasury bond yields weigh on the pair. As of writing, USD/CAD is trading around 1.3476, losing 0.05% on the day.
Statistics Canada revealed on Friday that Canadian Retail Sales for July rose by 0.3% from the 0.1% in the previous reading, below the market consensus of 0.4%. While, the Core Retail Sales climbed 1.0% from a 0.7% drop in the previous reading, beating the market expectation of 0.5%. Additionally, a rally in oil prices underpins the commodity-linked Loonie and might cap the upside for the USD/CAD pair as the country is the leading oil exporter to the United States.
On the other hand, Presidents of the Federal Reserve Banks of Boston and San Francisco, Susan Collins and Mary Daly, emphasized that although inflation is cooling down. However, further rate hikes would be necessary. That said, the higher-for-longer rate narrative has propelled the US Dollar against its rivals and might act as a tailwind for the USD/CAD pair.
On Friday, the US S&P Global Manufacturing PMI improved to 48.9 in September from 47.9 in August, indicating an ongoing contraction in the manufacturing sector's business activity. Meanwhile, the Services PMI fell to 50.2 from 50.5 in the previous month. Finally, the Composite PMI dropped to 50.1, down marginally from 50.2 in August.
Looking ahead, market participants will keep an eye on the Canadian Gross Domestic Product (GDP) for July due on Friday. The key event this week will be the US Core Personal Consumption Expenditure (PCE) Price Index, the Fed's preferred measure of consumer inflation. The annual figure is expected to drop from 4.2% to 3.9%. These figures could give a clear direction to the USD/CAD pair.
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.