US Dollar Weakens Against Canadian Dollar Amid Reduced Rate Hike Expectations

The USD/CAD pair has been declining due to reduced expectations of a US Federal Reserve rate hike, according to FXStreet. The pair dropped to around 1.3860 during the early European session on Monday and is now hovering just above the Bollinger lower band at 1.3855.

Market sentiment has shifted as traders pare bets on a rate hike from the US central bank, with the CME FedWatch tool showing that a rate hike next month is now priced at 30%, down sharply from about 40% a week earlier.

This decline in expectations has led to a soft run of US economic data, including an unexpected drop in Retail Sales. Sal Guatieri, a senior economist at BMO Capital Markets, stated that this points to a material slowdown in real consumer spending growth in the third quarter.