USD/CAD Pair Recovers Amid US Dollar Support

USD/CAD Pair Recovers Amid US Dollar Support

The USD/CAD pair has shown signs of recovery, reaching around 1.3730 during the early Asian trading hours on Thursday. This recovery comes after a three-day losing streak, with the US Dollar gaining strength following the hawkish stance from the US Federal Reserve.

During the recent Federal Open Market Committee (FOMC) meeting, the benchmark lending rate was left unchanged in a range of 5.25% – 5.50%, marking the seventh consecutive meeting with no rate adjustments. Fed Chair Jerome Powell mentioned that the current monetary policy stance is affecting inflation as intended, but the central bank will wait for more progress before making any changes. The FOMC’s latest economic predictions suggest only one rate cut is expected this year, a decrease from the three cuts forecasted in March.

US Economic Data

Recent data shows that the US Consumer Price Index (CPI) rose by 3.3% year-over-year in May, slightly lower than both the previous reading and market expectations of 3.4%. The core CPI, which excludes volatile food and energy prices, increased by 3.4% year-over-year in May, down from a 3.6% rise in April.

Bank of Canada (BoC) Governor Tiff Macklem commented on the bank’s rate decisions, mentioning that while there is a limit to how far the BoC can diverge on rates from the Fed, they have not yet reached that limit. The BoC recently lowered its benchmark rate by 25 basis points to 4.75%, with markets pricing in expectations of further cuts in the coming years.

Investors will be closely watching the US weekly Initial Jobless Claims, Producer Prices Index (PPI), and Fed’s John Williams speech later on Thursday. These events can provide further insight into the current economic conditions and potential future monetary policy decisions.

The USD/CAD pair has experienced some recovery following the recent developments in both US and Canadian monetary policies. Market participants will continue to monitor key economic indicators and central bank statements to gauge the future direction of this currency pair.

Forex News

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