USD/CAD delivers a consolidation breakdown amid subdued US Dollar

• USD/CAD corrects to near 1.3520 as US Dollar turns sluggish after a rally.
• Investors believe that the impact of higher interest rates for longer will be lower than taking interest rates to new highs.
• The strength in the oil price comes from expectations that more liquidity stimulus in China will increase oil demand.

The USD/CAD pair delivers a breakdown of the consolidation formed in a narrow range of 1.3533-1.3560 in the European session. The Loonie asset finds selling pressure as the US Dollar displays a subdued performance ahead of the Jackson Hole Economic Symposium, which will start on Thursday.

S&P500 futures generate decent gains in the London session. US equities ended mixed on Friday as investors hope that higher interest rates by the Federal Reserve (Fed) could impact corporate performance in the remaining year.

On Monday, the risk appetite of market participants seems improved as investors believe that the impact of stable interest rates at elevated levels will be lower than taking interest rates to new highs. For more clarity about the interest rate guidance, investors await the Jackson Hole Economic Symposium. Fed chair Jerome Powell is expected to provide a roadmap for achieving price stability without denting strong labor market conditions.

The US Dollar Index (DXY) demonstrates a sluggish performance and trades in a narrow range below 103.50 after a five-week bullish spell. Investors await a fresh trigger for further action. Apart from the Jackson Hole Economic Symposium, investors will focus on the US Durable Goods Orders for July on Thursday, which will be published at 12:30 GMT. The economic data is seen contracting by 4% vs. an expansion of 4.6%.

On the oil front, the oil price gathers strength for a fresh upside move after testing waters around $81.00. The strength in the oil price comes from expectations that more liquidity stimulus in China will increase oil demand from the largest importer.

It is worth noting that Canada is the largest exporter of oil to the United States and higher oil prices will support the Canadian Dollar.