USD/CAD Outlook:
Bearish, as the rate is below its recent average and near recent lows with pressure from weak U.S. economic data.
Key drivers:
• Rate gap: The Federal Reserve's decision to keep interest rates steady contrasts with the Bank of Canada's cautious approach, placing upward pressure on the CAD.
• Risk/commodities: Oil prices are at recent highs, offering support to the CAD as Canada benefits significantly from higher oil revenue.
• One macro factor: Recent weak U.S. retail sales figures suggest slowing consumer spending, which could negatively impact the USD.
Range:
The USD/CAD pair is likely to hold within its recent range, with little upward momentum expected against the current backdrop.
What could change it:
• Upside risk: A surprise jump in U.S. employment figures could strengthen the USD.
• Downside risk: Further declines in U.S. consumer confidence might pressure the USD lower.
