USD/CAD advances to approximately 1.4030 during the early European session on Monday. Trump announced that new discussions with Iran would commence on Monday. Market participants will be paying keen attention to the forthcoming US NFP report, scheduled for release later on Friday. The USD/CAD pair strengthens, approaching 1.4030 in the early European session on Monday. A decline in crude oil prices exerts downward pressure on the commodity-linked Canadian Dollar relative to the US Dollar. The US ISM Manufacturing Purchasing Managers Index data is set to be released later on Monday.
Oil prices have experienced a significant decline amid optimism regarding potential discussions between the United States and Iran. US President Donald Trump cancelled a scheduled military strike on Iran and announced that new discussions with Tehran would commence later in the day, alleviating worries regarding possible supply interruptions. It is important to recognise that Canada stands as a significant player in the oil export market, and typically, declining crude oil prices exert a detrimental influence on the value of the Loonie. The US employment data will be the focal point on Friday. The US Nonfarm Payrolls are projected to rise by 91,000 in July, compared to a previous increase of 57,000.
The Unemployment Rate is anticipated to rise to 4.3% in July, an increase from 4.2% in June. If the reports indicate outcomes that exceed expectations, this would bolster expectations for a US rate hike in September and provide support for the Greenback. The US Federal Reserve opted to maintain the current interest rates during its policy meeting in July last week. Markets have assigned a probability of approximately 64.7% for a rate hike in September, a decrease from around 77% prior to the July Federal Reserve meeting, as indicated by the CME FedWatch tool.
Analysts at Scotiabank observe that the Canadian Dollar has received support from “the generally softer USD undertone that has developed over the past couple of days,” yet they indicate that the currency “is having some trouble progressing through the 1.40 area” in USD/CAD, underscoring persistent resistance despite the enhanced context.