USD/CAD rises to near 1.3700 due to lower Oil prices

• USD/CAD extends its gains as the commodity-linked CAD struggles due to lower Oil prices.
• WTI price depreciates due to the potential for reduced demand in China, the world's largest Oil-importing country.
• Fed Chair Jerome Powell stated that inflation is on track to meet the Fed's target in a sustainable manner.

USD/CAD continues its winning streak for the fourth successive session, trading around 1.3690 during the European hours on Tuesday. The commodity-linked Canadian Dollar (CAD) faces challenges due to declining Oil prices. Given the fact that Canada is the biggest Oil exporter to the United States (US).

West Texas Intermediate (WTI) Oil price extends its losses for the third consecutive session, trading around $80.30 per barrel at the time of writing. This decline is attributed to a slowing Chinese economy, which is reducing demand in the world's largest oil-importing country.

China's Gross Domestic Product (GDP) grew 4.7% year-over-year in the second quarter, compared to a 5.3% expansion in the first quarter and an expected 5.1%. The National Bureau of Statistics (NBS) reported that China's economy operated generally steadily in the first half of the year, with H1 GDP growth at +5.0% year-on-year. Looking ahead, the NBS highlighted increasing external uncertainties and numerous domestic challenges that China's economy faces in the second half of the year.

Traders are now awaiting the upcoming release of Canada's Consumer Price Index (CPI) inflation data, which could influence the Bank of Canada’s (BoC) decision on potential further rate cuts following a recent quarter-point reduction in June.

On the USD’s front, Fed Chair Jerome Powell mentioned on Monday that the three US inflation readings of this year "add somewhat to confidence" that inflation is on course to meet the Fed’s target sustainably, suggesting that a shift to interest rate cuts may not be far off.

Additionally, Fed Bank of San Francisco President Mary Daly stated that inflation is cooling down in a way that bolsters confidence that it’s on its way to 2%. However, Daly added that more information is needed before making a rate decision.

According to CME Group’s FedWatch Tool, markets now indicate an 85.7% probability of a 25-basis point rate cut at the September Fed meeting, up from 71.0% a week earlier. Investors will likely observe the US Retail Sales data for June, which are set to be released later in the day, for further insights into US economic situation.