• USD/CAD continues losing ground for the fifth straight day and drops to a multi-month low.
• The narrowing US-Canada rate differential continues to benefit the CAD and exerts pressure.
• Bearish Oil prices and a modest USD strength also do little to lend any support to the major.

The USD/CAD pair prolongs its sharp retracement slide from the vicinity of the mid-1.3900s, or the highest level since October 2022 touched earlier this month and remains under some selling pressure for the fifth straight day on Thursday. The downward trajectory drags spot prices to the 1.3575-1.3570 area, or over a four-month low during the first half of the European session and confirms a near-term breakdown through the very important 200-day Simple Moving Average (SMA). 

Investors seem convinced that the Federal Reserve (Fed) will start lowering borrowing costs in September. In fact, the markets started pricing in the possibility of a larger-than-normal, 50 basis points (bps) rate next month after data released on Wednesday suggested that the US labor market was not as strong as estimated. This, in turn, will result in the narrowing of the rate differential between the US and Canada, which is seen driving flows towards the Canadian Dollar (CAD) and dragging the USD/CAD pair lower. 

The downward trajectory, meanwhile, seemed rather unaffected by bearish Crude Oil prices, which tend to undermine demand for the commodity-linked Loonie. The revised US employment statistics revived recession fears in the world's largest fuel consumer and comes on top of persistent worries about a slowdown in China – the world's second-largest economy and the largest Oil importer. This, in turn, keeps Crude Oil prices depressed just above a multi-month low touched on August 5, albeit does little to ease the bearish pressure surrounding the USD/CAD pair. Even a modest US Dollar (USD) fails to lend support to the major.