USD/CAD holds gains above 1.3900 with Canada’s Retail Sales, Fed Powell on focus  

• The US Dollar remains bid ahead of Powell's speech at Jackson Hole.
• Traders are waiting for a confirmation of an interest rate cut in September.
• In Canada, June's retail Sales figures are expected to show a significant recovery in June.

The US Dollar is trading higher for the fifth consecutive day against its Canadian counterpart on Friday. The pair hit a fresh three-month high at 1.3917 earlier on Friday, while downside attempts remain limited above the 1.3900 round level.

A moderate risk-averse sentiment is underpinning the US Dollar as investors hold their breath ahead of Fed Powell’s speech at the Jackson Hole meeting. With the market pricing in a 75% chance of a rate cut in September, the risk of hawkish Powell sticking to his “patience” message and warning about inflationary risks from tariffs keeps traders on their heels.

Recent comments from Fed speakers have failed to give any clear sign. Cleveland Fed President Hammack said she would not see a case for a rate cut in September, while Boston Fed President Collins showed openness to easing monetary policy amid increasing risks of a weakening labour market.

The Canadian Dollar, on the other hand, remains vulnerable amid the depressed Oil prices, with risks of a trade war with its southern neighbour looming. In the calendar today, June’s Retail Sales numbers are expected to show a significant recovery, following a 1.1% contraction in May.