- The USD/CAD pair pulled back after reaching a four-month peak at 1.3958 on Friday.
- The US dollar might face difficulties as the inflation report for August suggests potential interest rate reductions in October.
- The Canadian dollar may experience pressure due to modest oil prices, which are affecting the resumption of oil exports from Kurdistan.
On Monday, during Asian trading, the USD/CAD pair is expected to pause its five-day winning streak, hovering around 1.3920. This drop comes after Friday’s high, as the US dollar weakened in response to a report indicating that the US Federal Reserve could consider another interest rate cut in October.
The Personal Consumption Expenditures (PCE) price index showed a year-on-year increase of 2.7%, slightly up from the previous 2.6%. In a related note, the core PCE, which excludes volatile food and energy prices, met expectations at 2.9% year-over-year.
The prospects for the greenback remain uncertain, not least due to the looming risk of a US government shutdown. President Trump is scheduled to meet with Congressional leaders on Monday to discuss funding issues. If no agreement is reached, a shutdown could begin on October 1st, which coincides with the implementation of new tariffs on various goods. This political standoff might delay the release of September’s employment data and other significant economic indicators, as noted by Reuters.
Although the USD/CAD pair may decline further, the Canadian dollar (CAD) could be challenged as crude oil prices remain subdued. Currently, West Texas Intermediate (WTI) oil prices are around $65.00 per barrel.
Notably, oil prices dipped recently following the resumption of exports from Iraq’s Kurdistan region after more than two years. This influx of supply may create additional risks in an already saturated market. According to new agreements with Baghdad, the Kurdistan regional government and international oil companies plan to send between 180,000 to 190,000 barrels per day to the Seyan port in Turkey.
