External factors likely driving USDCAD

Canada most likely entered a technical recession after the poor print of May's monthly GDP (-0.2% m/m), with the decline mainly due to contractions in manufacturing, mining, and oil. This week, data releases will provide a more up-to-date view of the state of the Canadian economy. 

July's Manufacturing PMI (Tuesday) should allow the market to preliminary assess the extent and persistence of weakness in the manufacturing sector. The unemployment data for July (Friday) should shed light on the effects of the economic slowdown on the job market. Disappointing economic data and the ongoing decline in commodity prices should continue to weigh on the looney. 

"In the short term, we expect USDCAD to be driven by the USD side of the pair, with investors likely willing to add USDCAD topside on dips," says Barclays.