USD/CAD hangs near multi-month lows, below mid-1.3000s

• The USD remains on the defensive amid firming Fed rate cut expectations.
• A modest pullback in Oil prices undermined Loonie and helped limit losses.

The USD/CAD pair struggled to register any meaningful recovery and remained well within the striking distance of 8-1/2 month lows set on Friday.

The pair did attempt a modest bounce on Friday following the release of US Produce Price Index but was quickly sold into after comments by Chicago Fed President Charles Evans added to the Fed Chair Jerome Powell's dovish remarks and indicated that the US rate cuts are needed to boost inflation. 

The US Dollar remained depressed at the start of a new trading week and kept exerting some downward pressure on the major, albeit a modest pullback in Crude Oil prices undermined demand for the commodity-linked currency - Loonie and helped limit further losses, at least for the time being.

Oil prices slipped on Monday in the wake of Chinese macro data that showed economic growth slowed to 6.2% yearly rate during the second-quarter of 2019 - the slowest quarterly growth in at least 27 years and reinforced market concerns about demand in the world's largest Crude Oil importer.

It would now be interesting to see if the pair is able to attract any buying interest ahead of the key 1.30 psychological mark or continues with its recent bearish trajectory as market participants now look forward to the release of Empire State Manufacturing Index from the US for a fresh impetus.

This followed by a scheduled speech by New York Fed President John Williams might further collaborate towards producing some short-term trading opportunities later during the early North-American session.

Technical levels to watch