Select Language

USD/CAD trades with mild losses below 1.3800 ahead of US ISM Services PMI data

Breaking news

USD/CAD trades with mild losses below 1.3800 ahead of US ISM Services PMI data

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.08.05 08:09
USD/CAD trades with mild losses below 1.3800 ahead of US ISM Services PMI data

update 2025.08.05 08:09

  • USD/CAD posts modest losses near 1.3775 in Tuesday's early Asian session.
  • A weak US employment report and uncertainty over Fed independence undermine the US Dollar. 
  • Lower crude oil prices might weigh on the commodity-linked Loonie and cap the downside for the pair. 

The USD/CAD pair trades with mild losses around 1.3775 during the early Asian session on Tuesday. Weaker-than-expected US July employment data and the resignation of a Federal Reserve Governor weigh on the US Dollar (USD) against the Canadian Dollar (CAD). The US ISM Services Purchasing Managers Index (PMI) will take center stage later on Tuesday. 

Data released by the US Bureau of Labor Statistics (BLS) on Friday missed the estimates, with the US Nonfarm Payrolls (NFP) rising by 73,000 in July, versus a 14,000 increase (revised from 147,000) in the prior month. This reading came in worse than the estimations of 110,000. Additionally, the US Unemployment Rate climbed to 4.2% in July from 4.1% in June, as expected. The readings prompted investors to ramp up bets of imminent Federal Reserve (Fed) rate cuts, which undermine the Greenback. 

An unexpected resignation by Fed Governor Adriana Kugler also opened the door for US President Donald Trump to make an imprint on the US central bank much earlier than expected. The developments raise concern over the Fed's independence and contribute to the USD's downside.

On the other hand, a decline in crude oil prices might drag the commodity-linked Loonie lower and create a tailwind for the pair. Oil prices edge lower after the Organization of Petroleum Exporting Countries and allies (OPEC+) announced plans to boost oil production by 547K barrels per day (bps) for September. It's worth noting that Canada is the largest oil exporter to the US, and lower crude oil prices tend to have a negative impact on the CAD value.

Canadian Dollar FAQs

The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada's largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada's exports versus its imports. Other factors include market sentiment - whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) - with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.

The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.

The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada's biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.

While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada's case is the Canadian Dollar.

Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.


Date

Created

 : 2025.08.05

Update

Last updated

 : 2025.08.05

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

Japanese Yen surrenders intraday gains; USD/JPY retakes 147.00 amid modest USD uptick

The Japanese Yen (JPY) touched a nearly two-week high against its American counterpart following the release of the June Bank of Japan (BoJ) meeting Minutes, which reaffirmed bets for an imminent interest rate hike by the year-end.
New
update2025.08.05 11:32

NZD/USD remains weak near 0.5900 despite upbeat Chinese Services PMI data

The NZD/USD pair trades in negative territory near 0.5900 during the Asian trading hours on Tuesday. The New Zealand Dollar (NZD) remains weak against the US Dollar (USD) despite the upbeat Chinese economic data.
New
update2025.08.05 11:11

Australian Dollar remains subdued despite stronger China Services PMI

The Australian Dollar (AUD) loses ground for the second successive day despite the release of improved S&P Purchasing Managers' Index (PMI) data on Tuesday.
New
update2025.08.05 11:11

China's Caixin Services PMI unexpectedly jumps to 52.6 in July vs. 50.2 expected

China's Services Purchasing Managers' Index (PMI) unexpectedly leaped to 52.6 in July from 50.6 in June, the latest data published by Caixin showed on Tuesday.
New
update2025.08.05 10:46

US Dollar Index softens to below 99.00, US ISM Services PMI data in focus

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, trades on a negative note around 98.70 during the early Asian session on Tuesday.
New
update2025.08.05 10:26

PBOC sets USD/CNY reference rate at 7.1366 vs. 7.1395 previous

The People's Bank of China (PBOC) set the USD/CNY central rate for the trading session ahead on Tuesday at 7.1366 as compared to the previous day's fix of 7.1395 and 7.1667 Reuters estimate.
New
update2025.08.05 10:15

Japan's Akazawa says will focus on timing of presidential order on car tariff

Japanese Economy Minister and chief trade negotiator, Ryosei Akazawa, said on Tuesday that he will push the United States (US)  to give an order to take the auto tariff into effect as soon as possible.
New
update2025.08.05 09:58

WTI posts modest losses near $65.50 amid oversupply concerns, Russia uncertainty

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.65 during the early Asian trading hours on Tuesday.
New
update2025.08.05 09:21

BoJ Minutes say will continue raising policy rate if economy, prices move in line forecast

The Bank of Japan (BoJ) board members shared their views on the monetary policy outlook on Tuesday, per the BoJ Minutes of the June meeting.     
New
update2025.08.05 09:01

GBP/USD looks upwards ahead of looming BoE rate cut

GBP/USD pumped the brakes on Monday, holding steady near the 1.3300 handle after a sharp rebound brought on by fresh Greenback weakness thanks to an unexpected softening in US labor data late last week.
New
update2025.08.05 08:48

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel