USD/CAD Consolidates Above The 1.3500 Level, With Canadian Retail Sales And Jackson Hole On The Horizon

After reaching its highest level since May during Monday's early Asian session, the USD/CAD pair trades sideways above the 1.3500 threshold. The pair is presently trading near 1.3542, with a daily loss of 0.08%. Moreover, since Canada is the greatest oil exporter to the United States, a decline in oil prices weakens the Canadian Dollar.

The stronger US Retail Sales and resilient employment data strengthen the case for the Federal Reserve (Fed) to raise interest rates again. Last week's FOMC Minutes emphasised that inflation remained unacceptably high and that additional monetary policy tightening may be required to achieve the inflation target.

In contrast, Canadian Producer Prices for July increased by 0.4%, reversing June's -0.6% decline due to rising crude prices. Meanwhile, Raw Material Prices increased by 3.5% in July, compared to an increase of 11.1% year-to-date. Canada's investment and employment data appear dismal relative to US economic data, which weighs on the Loonie and propels the USD/CAD pair.

According to Reuters, the People's Bank of China (PBOC) stated on Sunday that China would provide financial support to alleviate local government debt concerns. The positive development could ameliorate concerns regarding the repercussions of China's debt crisis and real estate problems. In turn, this may limit the Loonie's decline and functions as a headwind for the USD/CAD pair.

Wednesday's release of the Canadian Retail Sales for June is awaited by market participants. This week's centrepiece will be Federal Reserve (Fed) Chairman Jerome Powell's speech at the Jackson Hole Symposium on Friday. The event will be crucial for determining a definitive USD/CAD movement.

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