CAD Gains Against USD as Rate Hike Bets Fade
The Canadian Dollar (CAD) has gained traction against the US Dollar (USD), with the USD/CAD pair declining to around 1.3790 in early European trading hours on Thursday.
This move comes as traders pare back bets on a Federal Reserve rate hike following tame US inflation data, which showed a drop in July retail sales for the first time in nine months. The odds of a rate hike at the Fed's September meeting now stand at 32.7%, down from 47% a month earlier.
Additionally, US President Donald Trump has paused new tariffs on Canadian goods for three days as trade talks with Canada continue, which may also be contributing to the CAD's strength.
Rising crude oil prices due to ongoing conflicts between the US and Iran could also provide support to the commodity-linked Loonie, with Canada being a major oil-exporting country. However, technical analysis suggests that USD/CAD remains capped under its 100-day simple moving average (SMA), indicating potential further weakness in the pair.