**USD/CAD Eases Below 10-Week High But Closes the Week on a Strong Note**
*Original Reporting by TradingPedia – [August 2, 2025]*
*Expanded and Updated Article by [Your Name]*
The U.S. dollar to Canadian dollar (USD/CAD) currency pair saw modest movement on Friday, August 2, 2025, settling below the recent 10-week high it had touched earlier in the week. Despite the pullback from that short-term peak, the pair ended the week in positive territory, reflecting ongoing support for the greenback amid broader market dynamics.
This week’s performance highlights the prevailing factors influencing USD/CAD, including fluctuations in oil prices, diverging monetary policy expectations between the Federal Reserve and the Bank of Canada (BoC), and investor sentiment in response to key economic data releases from both countries.
Below is an in-depth look at the key drivers that shaped USD/CAD’s performance over the past week, along with implications for future movements.
## Weekly Overview of USD/CAD Trading Activity
USD/CAD rose midweek to touch its highest level since late May 2025, approaching the 1.3800 mark. However, by Friday, the pair had slipped back to around 1.3760, although it still posted a weekly gain of more than 0.5%.
### Key Weekly Developments:
– **High Point:** USD/CAD reached a 10-week high of 1.3795 on Thursday, buoyed by broad USD strength.
– **Weekly Close:** The pair closed around 1.3760, still up from the previous week’s closing level near 1.3680.
– **Weekly Gain:** The U.S. dollar gained approximately 0.58% against the loonie over the seven-day period.
The near-term bullish sentiment for the greenback was primarily driven by resilient U.S. economic data and signals from the Federal Reserve that it may keep interest rates elevated for a prolonged period.
## U.S. Economic Data Supports the Greenback
U.S. macroeconomic indicators released during the week painted a picture of ongoing economic resilience. Despite the Fed’s extended period of monetary tightening, key metrics continued to show strength.
### Economic Highlights From the U.S.:
– **GDP Growth:** The advanced reading of Q2 GDP showed a stronger-than-expected annualized growth rate of 2.6%—above the forecasted 2.2%.
– **Labor Market:** Weekly initial jobless claims stayed subdued at 232,000, reflecting a tight labor market.
– **PCE Inflation:** The Fed’s preferred inflation gauge, the Core PCE Price Index, rose by 0.2% month-over-month in June, supporting the case for data-dependent guidance.
These factors suggested the U.S. economy was sufficiently strong to allow the Federal Reserve to maintain its hawkish tone, even if no immediate interest rate hike was forthcoming. Investors adjusted their expectations accordingly, bidding the dollar higher in anticipation of “higher for longer” borrowing costs.
## Federal Reserve Maintains Cautious but Hawkish Stance
Throughout the week, several Fed officials echoed the need to remain vigilant on inflation, even if no further rate hikes are imminent.
### Notable Remarks From Fed Officials:
– **Fed Chair Jerome Powell:** Emphasized that while inflation had moderated, it remains above target, and the central bank is prepared to tighten further if necessary.
– **Cleveland Fed President Loretta Mester:** Commented that “policy must remain restrictive for a while” to return inflation to the 2% goal.
– **New York Fed President John Williams:** Indicated that current interest rates are appropriate but hinted at rate cuts only in 2026, not earlier.
These comments solidified expectations that the Fed will not ease monetary policy in the near term. According to the CME FedWatch Tool, investors have pushed back forecasts for the first rate
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