USD/CAD gains ground above the 1.3540 mark, investors await Canadian Retail Sales, US PMI data

• USD/CAD gains momentum near 1.3544 amid the weakening of the Canadian Dollar.
• US Existing Home Sales in July were marginally lower than anticipated
• A decline in oil prices exerts pressure on the Loonie.
• Traders will keep an eye on Canadian Retail Sales, US PMI data.

The USD/CAD pair gains ground above the 1.3500 mark during the early Asian trading hours on Wednesday. The major pair currently trades around 1.3544, losing 0.05% on the day. Market players await the Canadian Retail Sales data for June. The monthly figure is expected to remain unchanged from the previous month.

The economic data released on Tuesday showed that US Existing Home Sales in July were marginally lower than anticipated, coming in at 4.07M compared to 4.15M expected and 4.16M in the previous month. US Existing Home Sales Change fell 2.2% in July, compared to a 3.3% decline in June. Additionally, the Richmond Fed Manufacturing Index for August decreased from -9 to -7, in accordance with market expectations.

Federal Reserve Bank of Richmond President Thomas Barkin stated on Tuesday that monetary policy would have to be tightened if inflation remained elevated and there were no indications that demand would decrease. The upbeat US data and the hawkish comments from the official lift the US Dollar (USD). However, Fed Chairman Jerome Powell Speaks on Friday will be a guide for investors and could provide insights into economic conditions.

On the Canadian Dollar front, a decline in oil prices weakens the Loonie as Canada is the largest exporter of crude to the US. The markets anticipate that the Bank of Canada (BoC) will maintain interest rate policies for an extended period. At its July meeting, the Bank of Canada (BoC) increased its interest rate by 25 basis points (bps) to 5%.

Looking ahead, Canadian Retail Sales for June and the US S&P Global PMI will be due on Wednesday. Attention will turn to the Jackson Hole annual symposium on Thursday and Fed Chair Powell’s speech on Friday. Market players will take cues from this data and find opportunities around the USD/CAD pair.