Select Language

USD/CAD steadies near four-week low amid thin holiday trading

Breaking news

USD/CAD steadies near four-week low amid thin holiday trading

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
update 2025.09.01 22:48
USD/CAD steadies near four-week low amid thin holiday trading

update 2025.09.01 22:48

  • USD/CAD snaps a four-day losing streak, rebounding modestly as the Canadian Dollar weakens.
  • The US Dollar stabilizes after dipping to a five-week low as thin liquidity prevails with the US and Canada on a bank holiday.
  • The broader sentiment toward the Greenback remains fragile amid concerns about trade policy and risks to Fed independence.

The Canadian Dollar (CAD) is slightly weaker against the US Dollar (USD) on Monday, with USD/CAD rebounding from earlier losses to halt a four-day decline. The pair is trading higher on the day, benefiting from a modest recovery in the Greenback, which had earlier dipped to its lowest level in more than a month during Asian trading hours.

At the time of writing, the USD/CAD is trading around 1.3750 during the American session, though it remains anchored near its four-week low. Monday's price action comes amid subdued market conditions, as both the United States (US) and Canada observe the Labor Day holiday, leading to thinner liquidity and muted volume flows. Despite the calm, the pair's reversal highlights shifting near-term sentiment, with traders reassessing positions following last week's decline in the US Dollar.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is stabilizing after briefly touching a five-week low. The index is holding firm above 97.50 as US Treasury yields hold steady and traders look ahead to a busy macro calendar later this week.

Broader sentiment around the US Dollar remains fragile, as traders weigh a mix of macroeconomic and political headwinds. Concerns over US protectionist trade policy, coupled with mounting political pressure on the Federal Reserve's (Fed) independence, continue to cloud the central bank's monetary policy trajectory. Expectations for a rate cut remain firmly anchored, with markets pricing in nearly a 90% probability of a 25 basis point reduction at the September 16-17 FOMC meeting, according to CME's FedWatch Tool.

Friday's PCE inflation data offered a mixed picture -- headline inflation remained steady, while core PCE ticked higher, complicating the policy outlook. Still, investors are increasingly focused on the labor market, where cooling hiring momentum and subdued wage growth are seen as a more immediate risk to the economy than lingering inflation.

This week's calendar is stacked with high-impact releases. The manufacturing Purchasing Managers' Index (PMI) for both the US and Canada is due on Tuesday. In the US, JOLTS Job Openings (July) on Wednesday, Initial Jobless Claims on Thursday, and the Nonfarm Payrolls (NFP) report on Friday will be closely watched for confirmation of labor market softening. Meanwhile, Canada's August employment report, also scheduled for Friday, will be key in shaping expectations for the Bank of Canada's (BoC) September 17 policy decision, particularly after Q2's surprise GDP contraction reignited speculation over further interest rate cuts.

Bank of Canada FAQs

The Bank of Canada (BoC), based in Ottawa, is the institution that sets interest rates and manages monetary policy for Canada. It does so at eight scheduled meetings a year and ad hoc emergency meetings that are held as required. The BoC primary mandate is to maintain price stability, which means keeping inflation at between 1-3%. Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Canadian Dollar (CAD) and vice versa. Other tools used include quantitative easing and tightening.

In extreme situations, the Bank of Canada can enact a policy tool called Quantitative Easing. QE is the process by which the BoC prints Canadian Dollars for the purpose of buying assets - usually government or corporate bonds - from financial institutions. QE usually results in a weaker CAD. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The Bank of Canada used the measure during the Great Financial Crisis of 2009-11 when credit froze after banks lost faith in each other's ability to repay debts.

Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Bank of Canada purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the BoC stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Canadian Dollar.


Date

Created

 : 2025.09.01

Update

Last updated

 : 2025.09.01

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

Silver Price Forecast: XAG/USD hovers near $44.00 near 14-year highs

Silver price (XAG/USD) pares its recent losses from the previous session, trading around $44.00 per troy ounce during the European hours on Thursday.
New
update2025.09.25 12:04

WTI declines to near $64.50 on profit-taking

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $64.55 during the Asian trading hours on Thursday. The WTI decline as traders take profits after a rise to a three-week high in the previous session.
New
update2025.09.25 11:43

USD/CAD holds losses below 1.3900 ahead of US Q2 GDP Annualized

USD/CAD halts its three-day winning streak, trading around 1.3890 during the Asian hours on Thursday. The pair loses ground as the US Dollar (USD) corrects downwards after registering more than 0.5% gains in the previous session.
New
update2025.09.25 11:38

Japanese Yen strengthens on hawkish BoJ Minutes, lacks follow-through

The Japanese Yen (JPY) strengthened during the Asian session on Thursday following the release of the Bank of Japan's (BoJ) July meeting Minutes, which revealed that the central bank expects to keep hiking if inflation and the economy move as estimated.
New
update2025.09.25 11:27

Australian Dollar pares recent losses due to technical correction

The Australian Dollar (AUD) advances against the US Dollar (USD) on Thursday, recovering recent losses from the previous session. The AUD/USD pair gains ground as the Greenback remains steady ahead of the US Gross Domestic Product (GDP) for the second quarter (Q2) due later in the day.
New
update2025.09.25 11:20

PBOC Deputy Governor: Global bond investors remain confident in China's bond market

The People's Bank of China (PBOC) Deputy Governor said on Thursday that global bond investors remain confident in China's bond market. The Chinese officials further stated that they are working on promoting Chinese onshore bonds to become qualified collateral in Hong Kong and global markets. 
New
update2025.09.25 10:52

NZD/USD extends downside to near 0.5800 as Fed's Powell signals caution on rate cuts

The NZD/USD pair remains on the defensive around 0.5815 during the early Asian session on Thursday. Federal Reserve (Fed) Chair Jerome Powell struck a cautious tone on further easing on Tuesday, supporting the US Dollar (USD).
New
update2025.09.25 10:50

PBOC sets USD/CNY reference rate at 7.1118 vs. 7.1077 previous

On Thursday, the People's Bank of China (PBOC) set the USD/CNY central rate for the trading session ahead at 7.1118 compared to the previous day's fix of 7.1077 and 7.1293 Reuters estimate.
New
update2025.09.25 10:15

Gold Price Forecast: XAU/USD drifts higher to near $3,750 amid rate cut bets, geopolitical risks

The Gold price (XAU/USD) trades in positive territory around $3,750 during the early Asian session on Thursday. The precious metal edges higher amid expectations of further US rate cuts from the Federal Reserve (Fed) this year and persistent geopolitical risks.
New
update2025.09.25 10:02

BoJ Minutes: To keep raising rates if economy, prices move in line with its forecast

The Bank of Japan (BoJ) board members shared their views on the monetary policy outlook on Thursday, per the BoJ Minutes of the July meeting.     
New
update2025.09.25 08:59

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