The USD/CAD currency pair is having trouble taking advantage of Friday’s bounce from 1.3320, which was its lowest level since November 25. On Monday, there will be more supply. During the Asian session, the pair is on the defensive near the daily low, around the mid-1.3300s.

Speculation that the Federal Reserve may be nearing the end of its cycle of rate hikes has caused the US dollar to drop to its lowest level in seven months. Because of this, the USD/CAD pair goes down. Investors are betting that the US central bank will be less aggressive and raise interest rates less often. According to data released last week, the US consumer price index (CPI) dropped in December for the first time in more than two and a half years. This made the bets look better.

Several Fed officials backed a 25-bps lift-off on February 25. This, along with the optimism in the stock market, makes the greenback less attractive as a haven. But worries about a more significant global economic crisis should keep people from being too optimistic and help the buck. Also, a slight drop in the price of crude oil could hurt the commodity-linked loonie and limit the USD/CAD pair’s decline. Given the mixed fundamentals, aggressively bearish traders should be ready to lose more.

US markets are closed on Monday because it is Martin Luther King Jr. Day. The economic news from Canada doesn’t move the market either.

Conclusion

So, traders will look to the Business Outlook Survey from the Bank of Canada to see how the USD/CAD is moving. Changes in the price of oil should also affect the Canadian Dollar and give traders options around the major in the short term.