• USD/CAD holds ground amid improved US Treasury yields on Monday.
• CME FedWatch Tool suggests a 50% chance of a 50 basis point Fed rate cut by the end of this year.
• The downside of the commodity-linked CAD could be limited due to higher crude Oil prices.

USD/CAD remains in the positive territory, trading around 1.3560 during the Asian session on Monday. However, the US Dollar (USD) may struggle due to rising odds for further rate cuts by the US Federal Reserve (Fed) in 2024. According to the CME FedWatch Tool, markets are pricing in a 50% chance of a 50 basis point rate cut to a range of 4.0-4.25% by the end of this year.

The US Dollar (USD) continues to rise as Treasury yields recover their losses. The US Dollar Index (DXY), which measures the value of the US Dollar, holds ground around 100.80 with 2-year and 10-year yields on US Treasury bonds standing at 3.59% and 3.74%, respectively.

Philadelphia Fed President Patrick Harker stated on Friday that the US central bank has effectively steered through a challenging economic landscape in recent years. Harker compared monetary policy to driving a bus, where it's essential to balance speed.

Canada’s Retail Sales rose by 0.9% month-over-month to $66.4 billion in July, rebounding from a 0.2% decline in June and surpassing the expected 0.6% increase. Sales grew in seven of nine subsectors, with motor vehicle and parts dealers leading the gains. This marked the strongest expansion in Canadian retail turnover since April 2023, countering calls for aggressive rate cuts by the Bank of Canada (BoC).

The downside of the Canadian Dollar (CAD) would be restrained due to higher crude Oil prices. West Texas Intermediate (WTI) Oil price appreciates to near $71.50 at the time of writing. Crude Oil prices are rising due to concerns over potential supply disruptions amid escalating tensions in the Middle East.