USD/CAD sticks to modest recovery gains, remains below 1.3700 ahead of US data

The USD/CAD currency pair continued to cling to its modest recovery gains, albeit staying below the crucial 1.3700 level, as traders adopted a cautious stance ahead of key economic data releases from the United States.

Throughout the trading session, the pair showed resilience, gradually clawing back some ground following recent losses. However, despite the uptick, it remained confined below the 1.3700 threshold, reflecting persistent selling pressure on the US dollar against its Canadian counterpart.

Market sentiment surrounding the greenback remained subdued amid lingering concerns about the pace of the US economic recovery and uncertainties surrounding monetary policy direction. Investors closely monitored incoming data for fresh insights into the health of the world’s largest economy and clues about the Federal Reserve’s future policy trajectory.

In particular, attention was focused on the release of key economic indicators, including employment figures and manufacturing data, which could provide valuable clues about the underlying strength of the US economy. Any surprises in the data were likely to influence market expectations regarding the timing of potential interest rate hikes by the Federal Reserve.

Meanwhile, the Canadian dollar found support from resilient oil prices, with crude oil benchmarks holding near multi-year highs amid ongoing supply disruptions and geopolitical tensions. The correlation between the Canadian dollar and oil prices remained a key driver for the USD/CAD pair, with strength in the commodity supporting the loonie against its US counterpart.

As traders braced for the upcoming US data releases, volatility in the USD/CAD pair was expected to increase, with market participants closely monitoring developments for trading cues. Any divergence from expectations in the economic data could trigger sharp moves in the currency pair, shaping its near-term trajectory in the foreign exchange markets.