According to a number of forecasts we have seen the USD/CAD is likely to edge beyond 1.10.

This will help support the GBP/CAD exchange rate as we see sterling as being a potential outperformer through the remainder of 2014.

At the time of writing the following levels are noted:

The pound sterling to Canadian dollar exchange rate is at 1.8124.The euro to Canadian dollar exchange rate is at 1.4153.The US dollar to Canadian dollar exchange rate is at 1.1115.Be aware: All forex quotes here are taken from the wholesale spot markets; your bank will levy a spread at their discretion. However, an independent FX specialist will undercut your bank's offer, delivering up to 5% more currency in some instances. Learn more.

CAD Forecast to Remain Under Pressure Through Remainder of September

The Canadian currency faces a challenging end to the month after Tuesday showed a surprise fall in retail sales in July which sets the stage for a report on Sept 30 to show subdued growth for the same month.

"The absence of Canadian data until the month-end growth reading should see the loonie driven mostly by risk sentiment," says Joe Manimbo at Western Union.

Meanwhile, we also note that the CAD's fellow commodity dollars - the NZD and AUD - are under fresh pressure today on central bank rhetoric.

If weakness here persists we find it hard to assume the Canadian dollar will be able to stage a strong rally.

Forecasting Canadian Dollar Declines vs the US Dollar

A short-term correctional sequence seems to be over and done with after yesterday's break back through 1.1023 (now support).

"With additional mid-body support at 1.1000, the recent 1.11 high is at stake - over which extension towards a key ref at 1.1280 should be penciled in. Ditch this bullish thought on a move back under 1.0926. Current intraday stretches are located at 1.0980 & 1.1060," say SEB Group in a currency forecast note to clients.

USD/CAD to Rise Higher

Also backing the USD to advance over the CAD is Camilla Sutton at Scotiabank:

"USDCAD is rising back towards its comfort zone of 1.10 on a broader move in growth FX. Accordingly, entering the NA open AUD, MXN, CAD and NZD are all weak. Today, the BoC’s Deputy Governor Wilkins speaks on “the new economic reality for Canada emerging in the wake of the great recession and what it means for monetary policy”, her speech is released at 12:45 and there is no press conference.

"There is limited data this week with just retail sales on Tuesday to look forward to. USDCAD is trading comfortably close to 1.10 and very close to its year-to-date average of 1.0931."

China Remains Important to Commodity Dollars

The Canadian, Australian and New Zealand dollars have all been under pressure as of late over concerns that the Chinese economy is slowing down.

This has pressured commodity prices lower which has in turn hurt the those countries whos currencies reflect their bias towards commodity exports.

However, the CAD and friends were boosted earlier this week on news that Chinese HSBC Manufacturing PMI rose to a two month high with output, new orders and new export orders all increasing at a faster pace.

The one sour note in the report was the decline in the employment component which continued to trend below the 50 boom/bust line.

"Nevertheless the overall readings provided a modicum of relief to investors who were worries that Chinese manufacturing sector was tipping into a recession. The steady state of activity suggests that Chinese demand is not deteriorating and that was welcome news to the Aussie which popped on the news through the 8900 figure," says Boris Schlossberg at BK Asset Management.