**USD/CAD Slips Below 10-Week High After Gaining for the Week**
Originally reported by TradingPedia’s Dimitar Bogdanov, the U.S. dollar to Canadian dollar currency pair (USD/CAD) concluded the week of August 2, 2025, with a modest retracement from a 10-week high. Despite the pullback, the pair maintained a weekly gain, buoyed by stronger-than-expected U.S. economic data and broad-based U.S. dollar strength. However, softening crude oil prices and mixed economic data from Canada also played a central role in the currency pair’s weekly performance.
This article provides a detailed breakdown of the USD/CAD pair’s recent performance, the underlying macroeconomic factors, and what might lie ahead. Additional insights from reputable financial sources like ForexLive, Reuters, and Bloomberg expand on the original analysis.
## USD/CAD Weekly Overview
The USD/CAD pair retreated from a 10-week high reached earlier during the final trading session of the week but still posted a positive weekly tally. The retracement was seen as part of a technical correction following a strong rally, rather than a sign of a true reversal. Here’s an overview of the key highlights:
– The pair touched highs near 1.3663 before settling lower around 1.3624 on Friday.
– Despite Friday’s pullback, USD/CAD gained approximately 0.8% for the week.
– U.S. macroeconomic data released over the course of the week helped strengthen demand for the dollar.
– Weak oil prices weighed on the Canadian dollar, which is frequently driven by commodity market moves due to Canada’s status as a major oil exporter.
## Drivers Behind USD Strength
The U.S. dollar showed strength across multiple major currency pairs during the week, including USD/CAD, fueled by stronger-than-expected U.S. economic data. According to economic reports released during the week:
– The U.S. GDP for Q2 2025 rose by 2.6% (annualized), beating expectations of 2.2%.
– Jobless claims decreased to 217,000, compared to the forecast of 221,000.
– The personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, showed a moderate 0.1% rise in June, hinting at gradual inflation cooling.
– Consumer confidence, as measured by the Conference Board index, climbed to 124.3 in July 2025, up from 121.3 in June, indicating that consumer sentiment is rebounding.
These economic indicators suggest that the U.S. economy remains resilient, which could justify the Federal Reserve maintaining current interest rate levels for longer or potentially considering another hike if inflation ticks higher.
The forex market interpreted this strong data as a signal to maintain long positions on the dollar, particularly against energy-sensitive and commodity-linked currencies like the Canadian dollar.
## Canadian Economic Factors and BoC Outlook
On the Canadian front, economic data has been more mixed, contributing to CAD’s relatively weaker tone in recent sessions. The following are notable developments:
– Canada’s GDP in May 2025 showed flat month-over-month growth, falling short of the 0.2% that economists had projected, suggesting an economy struggling to gain momentum.
– Inflation remains above the Bank of Canada’s 2% target. The June 2025 Consumer Price Index came in at an annualized rate of 2.7%, but down from 3.1% in May.
– The Canadian labor market remains tight, although employment data showed the economy added just 13,500 jobs in June, suggesting some signs of a slowdown.
In terms of monetary policy, the Bank of Canada (BoC) held its policy interest rate steady at 5.00% during its July 2025 meeting, signaling a shift to a more measured stance. However, BoC Governor Tiff Macklem emphasized that the central bank would remain
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