The USD/CAD currency pair continued its downward drift in early European trading on Thursday, hovering near 1.3665–1.3670 — just above the lowest level recorded since October 2024. Market momentum remains tilted toward the downside, as bearish sentiment strengthens around the US Dollar.
Speculation over a potential US-Canada trade agreement ahead of the G7 Summit on June 15 has bolstered the Canadian Dollar, further supported by the Bank of Canada’s decision to leave interest rates unchanged on Wednesday. The Canadian Dollar, often influenced by energy prices, also found support in a modest rise in crude oil, reinforcing its advantage over the greenback.
Meanwhile, weaker-than-expected US economic data released on Wednesday has intensified market expectations for a Federal Reserve rate cut in September. This outlook triggered a notable drop in both the two-year and 10-year US Treasury yields, sinking to their lowest levels since May 9. Mounting concerns over the US fiscal position and ongoing trade tensions are compounding pressure on the dollar, limiting its potential for recovery.
Given this backdrop, any near-term rebounds in the USD/CAD pair are likely to be viewed as selling opportunities. Investors now await the release of US Weekly Initial Jobless Claims and remarks from key Federal Open Market Committee (FOMC) officials, which could further shape market expectations for the dollar. Additionally, movements in oil prices are expected to influence short-term trading in the pair ahead of key employment reports from both the US and Canada.
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