- USD/CAD remains muted in the initial Asian trading hours on Monday.
- Lower US Treasury yields undermine the demand for the US dollar.
- The Canadian dollar gains momentum as oil prices stabilize after the storm.
The USD/CAD pair consolidate gains on Tuesday in the initial Asian session, following the previous session’s lull performance. The pair moves in a very narrow trade band with no meaningful traction.
At the time of writing, USD/CAD is trading at 1.2605, up 0.03% for the day.
A combination of factors is responsible for the downbeat performance of the USD. The US Dollar Index (DXY), which tracks the performance of the greenback against the six major currencies, trades with modest gains below the 93.00 mark.
The US Pending Home Sales data fell for the second month. The readings came at 8.5% lower on yearly basis in July, amid limited supply. Investors continued to digest the dovish stance from the Fed Chair Jerome Powell at the Jackson Hole Symposium that the central bank would start taper by the end of this year but the rate hike is still far away.
On the other hand, the Canadian dollar gains as WTI crude rose above $69 a barrel on the concerns of disturbing supply due to Hurricane Ida.
In addition to that Canada posted a current account surplus of CAD 3.6 billion in Q2, following a CAD 1.8 million in the first quarter.
As for now, traders wait for the Canadian Gross Domestic Product (GDP) Rate, US Chicago PMI to gauge the market sentiment.