The USD/CAD continues to tip to the downside as the Loonie (CAD) gets pushed higher by rising oil prices. Oil prices continue to chew through chart paper, with West Texas Intermediary (WTI) US crude oil marking a fresh high of $91/bbl in Monday trading. The USD/CAD is testing into five-week lows as the US Dollar (USD) gives up ground against the commodity-supported CAD, but the midweek sees the Federal Reserve (Fed) landing with another rate call. Markets are broadly expecting the Federal Open Market Committee (FOMC) to hold steady with interest rates at 5%. Oil prices will be driving the USD/CAD for the early week, but the economic calendar will see plenty of Greenback-based momentum from Wednesday onwards. However, before any of that can happen, the CAD will see Consumer Price Index (CPI) figures for Canada on Tuesday.
The Canadian CPI is scheduled for 12:30 GMT Tuesday, and is expected to climb to 3.8% from the previous 3.3% as the Bank of Canada (BoC) struggles to contain inflation largely bolstered by rising energy prices. Thursday will bring US Initial Jobless Claims which lasted printed at 220K, while Friday sees Canadian Retail Sales for July, forecast to tick higher from 0.1% to 0.4%. US Manufacturing and Services Purchasing Manager Index (PMI) data is also slated for Friday. The Manufacturing PMI is expected to decline slightly from 47.9 to 47.8, while the services component is seen declining from 50.5 to 50.3. The Dollar-Loonie pairing is trading to the midpoint of familiar territory initially reached in late 2022, and the pair is rapidly approaching the 200-day Simple Moving Average (SMA) near 1.3464 as prices slip past the 34-day Exponential Moving Average (EMA), currently turning bearish into 1.3505. The Relative Strength Index (RSI) and Moving Average Convergence-Divergence (MACD) indicators are firmly bearish on daily candlesticks, and the indicators are warning buyers that there could still be plenty of room to run towards the downside before a successful bullish offensive can be mounted.