Select Language

USD/CAD remains below 1.3800 due to subdued Oil prices, US ISM Services PMI eyed

Breaking news

USD/CAD remains below 1.3800 due to subdued Oil prices, US ISM Services PMI eyed

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.08.05 15:36
USD/CAD remains below 1.3800 due to subdued Oil prices, US ISM Services PMI eyed

update 2025.08.05 15:36

  • USD/CAD steadies ahead of the US ISM Services PMI release due later in the day.
  • The commodity-linked CAD remains under pressure due to the weaker WTI price.
  • Traders are turning cautious amid growing concerns about the Fed's independence.

USD/CAD holds ground after two days of losses, trading around 1.3790 during the Asian hours on Tuesday. The pair moves little as the commodity-linked Canadian Dollar (CAD) struggles amid weaker crude Oil prices. Market participants will likely observe the US ISM Purchasing Managers' Index (PMI) data later in the North American session.

West Texas Intermediate (WTI) Oil price remains steady after a three-day losing streak, hovering around $65.60 per barrel at the time of writing. Oil prices may further depreciate amid mounting concerns over a potential supply glut after the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, decided to increase production by 547,000 barrels per day in September.

The USD/CAD pair remains steady as traders adopt caution as the market sentiment turns cautious over rising concerns over the US Federal Reserve's (Fed) independence. Fed Governor Adriana Kugler unexpectedly resigned on Monday. This event has provided US President Donald Trump an earlier-than-anticipated opportunity to influence the central bank. Trump may nominate a replacement potentially more aligned with his calls for lower rates.

However, the upside of the US Dollar (USD) could be limited amid rising odds of an interest rate cut by the US Federal Reserve (Fed) in September, following weaker labor market data that has heightened concerns over the US economic outlook. According to CME's FedWatch Tool, markets are pricing in a 91.6% chance of a Federal Reserve rate cut next month.

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

EUR: Consolidation in quiet conditions - ING

EUR/USD looks quite comfortable near the 1.1550 level and, in the absence of market drivers, may hang around that level for a while, ING's FX analyst Chris Turner notes.
New
update2025.08.05 17:30

EUR/GBP extends losses below 0.8700 with BoE interest rates coming into view

The Euro trades lower for the second consecutive day on Tuesday, exploring levels sub-0.8700 as the Pound trims some losses, with investors shifting their gaze to the Bank of England's monetary policy decision, due next Thursday.
New
update2025.08.05 17:15

Forex Today: Markets quiet down ahead of mid-tier US data

Here is what you need to know on Tuesday, August 5:
New
update2025.08.05 17:11

ISM Services PMI Preview: US services sector expected to expand in July

On Tuesday, the Institute for Supply Management (ISM) will unveil its July Services PMI, and analysts expect it to edge up to 51.5 from June's 50.8. That would mark a second straight month of growth in the services sector -- a sign of its resilience and a boost to confidence in the wider US economy.
New
update2025.08.05 17:00

US Dollar Index maintains position near 99.00 ahead of ISM PMI data

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is holding ground for the second successive day and trading around 98.80 during the European hours on Tuesday.
New
update2025.08.05 16:46

Pound Sterling flattens as investors shift focus to upcoming BoE monetary policy decision

The Pound Sterling (GBP) trades broadly flat against its major peers on Tuesday as investors shift their focus to the Bank of England's (BoE) monetary policy announcement on Thursday.
New
update2025.08.05 16:42

NZD/USD slides further below 0.5900 as the US Dollar picks up from lows

The New Zealand Dollar has shrugged off the positive services activity data from China released earlier on Tuesday and extends its reversal from Monday's highs at 0.5930 to levels below 0.5900.
New
update2025.08.05 16:38

Silver Price Forecast: XAG/USD gains further to near $37.50 as Fed rate cut in September looks likely

Silver price (XAG/USD) extends its recovery move to near $37.50 during the European trading session on Tuesday. The white metal strengthens as traders have raised bets supporting interest rate cuts by the Federal Reserve (Fed) in the September meeting.
New
update2025.08.05 16:35

Dow Jones futures surge over potential for Fed rate cut, await US ISM PMI data

Dow Jones futures appreciate ahead of the US market opening on Tuesday, trading around 44,380, up by 0.17%, during early European hours. Meanwhile, S&P 500 futures surge by 0.25% to 6,370, and Nasdaq 100 futures advance 0.33% to trade above 23,300.
New
update2025.08.05 16:12

GBP/JPY attracts some buyers to above 195.50 despite rising BoJ rate hike bets

The GBP/JPY cross attracts some buyers to around 195.60 during the early European trading hours on Tuesday. The Japanese Yen (JPY) edges lower against the Pound Sterling (GBP) amid risk-on sentiment and political uncertainty in Japan.
New
update2025.08.05 16:05

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