USD/CAD hits lows of 1.3500 following Powell speech and Canadian retail sales data
The USD/CAD pair has dropped over 300 pips in August, hitting its lowest point since April at 1.3500. Fed Chair Powell's comments on adjusting policy sent the USD down, while stronger-than-expected Canadian retail sales have bolstered the CAD.
Key points
- USD/CAD fell more than 300 pips in August, reaching a new low of 1.3500
- Federal Reserve Chair Powell suggested policy adjustments, indicating inflation is nearing the 2% target
- Canadian retail sales increased by 0.6% month-over-month in July, indicating economic resilience
- Potential US rate cuts could further decrease USD demand, impacting the USD/CAD pair
USD/CAD nears 1.3500, reaching a new low since this April
The USD/CAD pair has reached its lowest point since early April, falling more than 300 pips in the month of August from well above 1.3800 to now trade at 1.3500. This decline marks a significant shift in the forex market, providing traders with new opportunities and challenges.
“The time has come” - Powell's confidence sends US dollar lower
The dollar index has depreciated against all major currencies, with USD/JPY at 144.9, EUR/USD at 1.1178, and GBP/USD at 1.319. This comes after Federal Reserve Chair Jerome Powell confidently suggested policy adjustments, indicating that inflation is nearing the 2% target. Powell's statement, “The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” has fueled expectations of an impending rate cut.Canadian retail sales show an increase stronger than expected
Advanced reports indicated a 0.6% month-over-month increase in Canadian retail sales for July. This stronger-than-expected growth reflects the resilience of the Canadian economy and has contributed to the recent strength of the Canadian dollar.Where next for USD/CAD?
While currently at a 4-month low, USD/CAD traded as low as 1.32 this year and comfortably in the 1.34 - 1.36 range for the first four months of the year. A potential US rate cut could further decrease the demand for USD, leading to lower prices.How to trade USD/CAD
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD/CAD
Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.