USD/CAD extends its losing streak amid firm Oil prices, US Inflation in focus

• USD/CAD extends its losing spree as firm Oil prices continue to strengthen the Canadian Dollar.
• The appeal of risk-sensitive assets improves as fears of US recession have waned.
• Investors await the US Inflation data for July for fresh guidance on interest rates.

The USD/CAD pair continues its losing spell for the seventh trading session on Monday. The Loonie asset faces severe selling pressure due to sheer strength in global Oil prices on deepening supply issues.

West Texas Intermediate (WTI), futures on NYMEX, rose by more than 5% in last four trading sessions due to worsening geopolitical tensions and a temporary shutdown of Libya's largest oil field, Sharara amid civil unrest due to rising fuel prices, poor economic opportunity and unemployment.

Conflicts in the Middle East between Iran and Israel are expected to widen further as the latter prepares in anticipation of Iran’s retaliation for the assassination of the Hamas leader by an Israeli air strike in Tehran.

It is worth noting that Canada is the leading exporter of Oil to the United States (US) and higher Oil prices strengthen the Canadian Dollar (CAD).

Meanwhile, the market sentiment has improved as fears of a potential US recession have waned. S&P 500 futures have posted decent gains in European trading hours. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades sideways above 103.00.

This week, the US Dollar will be guided by the US Consumer Price Index (CPI) data for July, which will be published on Wednesday. The US CPI report is expected to that annual headline and core inflation has decelerated for the fourth month in a row. This will boost expectations of a big interest-rate cut announcement by the Federal Reserve (Fed).