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During the early Asian session, the USD/CAD pair begins the week on a positive note and advances higher above the critical resistance area at 1.3250. Later this week, market participants will closely monitor Canadian and American employment data. The significant currency pair is currently trading at 1.3260, up 0.06 percent on the day.

Statistics Canada reported on Friday that the Gross Domestic Product (GDP) of Canada increased by 0.3% in May, in line with market expectations. However, the number is anticipated to decrease in June, indicating a national economic slowdown. This could put an end to the Bank of Canada's (BoC) tightening cycle, which has driven interest rates to their highest level in 22 years.

The Bank of Canada announced a 25 basis point (bps) increase to 5% on July 12. Tiff Macklem, governor of the Bank of Canada, revealed that future policy decisions would be based on incoming data and the inflation outlook. Participants on the market anticipated that the Bank of Canada (BoC) would not deem it necessary to increase interest rates further in 2018.

In the meantime, the rise in energy prices has bolstered the Canadian dollar and offset a slowdown in the manufacturing sector. As the primary oil exporter to the United States, Canada's currency benefits from an increase in crude oil prices.

On the front of the US dollar, annual inflation grew at its weakest rate in over two years. The Personal Consumption Expenditures (PCE) Price Index decreased from 3.8% in May to 3% in June, below market expectations of 3.1%. The preferred inflation gauge of the Federal Reserve, the Core PCE Price Index, came in at 4.1% annually, down from 4.6% in May and below market expectations of 4.2%. Lastly, Personal Income and Personal Spending grew by 0.3% and 0.5%, respectively, month-over-month. The milder data suggests that inflationary pressures are easing, which could bring the Federal Reserve (Fed) closer to the end of its hiking cycle.

Investors will intently monitor Friday's Canadian employment report later this week. Additionally, the US ADP Employment Change for July and Nonfarm Payrolls will be significant events to track. The data will be essential for determining a definitive USD/CAD movement.

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