USD/CAD Plummets as Weakening US Dollar Meets Rising Oil Prices
The USD/CAD pair declined for the second consecutive trading session, trading near 1.3830 during the Asian session on Thursday.
The Canadian dollar has received multifaceted support: the U.S. dollar faces broad-based pressure, while crude oil prices remain elevated, enhancing the relative strength of the commodity-linked CAD.
A key factor weighing on the U.S. dollar is the weakening signal from the U.S. labor market. The latest ADP data revealed that U.S. private-sector employment increased by only 38,000 in August, falling short of the market expectation of 47,000 and also below the revised figure of 46,000 for July.
The Bank of Canada has heightened its focus on upside inflation risks, leading the market to reassess future Canadian interest rate policy. Although the CAD previously retreated significantly during a period of U.S. dollar strength, it has regained buying support amid improved Canadian rate expectations and rising oil prices.