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The USD/CAD pair extended its three-day winning streak, reaching a fresh weekly high above 1.3650 during the European session on Friday. The Canadian Dollar weakened amid renewed USD strength driven by expectations of tighter U.S. monetary policy and improved risk appetite. Traders are now closely monitoring upcoming U.S. nonfarm payrolls and PCE price index data, which could influence Federal Reserve rate decisions and USD momentum. The USD's resilience reflects ongoing speculation about the Fed's policy trajectory, with markets pricing in a 75% probability of a 25-basis-point rate hike in November. A stronger USD typically pressures emerging market currencies like the CAD, especially with Canada's economic data showing mixed signals. This dynamic could impact global forex markets, particularly in the Gulf where USD exposure is significant. For MENA investors, the CAD's weakness against the USD highlights the importance of monitoring U.S. macroeconomic releases. If the Fed maintains an aggressive tightening cycle, the USD could remain a safe-haven asset. Key watchpoints include Friday's U.S. jobs report and the PCE inflation data, which may trigger short-term volatility in USD/CAD and related currency pairs.
