- USD/CAD gains ground due to the hawkish sentiment surrounding the Fed.
- CME FedWatch Tool suggests the odds of a Fed rate cut in September have decreased to nearly 49.0%.
- The decline in the WTI price put pressure on the commodity-linked Canadian Dollar.
USD/CAD continues its winning streak for a third successive session, trading around 1.3760 during the European hours on Tuesday. US Dollar (USD) remains strong as investors adopt cautious stance ahead of the Federal Reserve’s (Fed) interest rate decision scheduled on Wednesday.
The Federal Reserve is anticipated to keep interest rates steady in the range of 5.25%-5.50% as it aims to curb inflation toward its 2% target. Additionally, the US headline and core CPI figures for May are estimated to show year-over-year increases of 3.4% and 3.5%, respectively.
Robust US jobs data for May has reduced the odds of two Federal Reserve interest rate cuts in 2024. According to the CME FedWatch Tool, the likelihood of a Fed rate cut in September by at least 25 basis points has decreased to nearly 49.0%, down from 59.5% a week earlier.
On Loonie’s front, the decline in the crude Oil prices put pressure on the commodity-linked Canadian Dollar (CAD), given the fact that Canada is the largest Oil exporter to the United States (US). West Texas Intermediate (WTI) Oil price hovers around $77.30 per barrel, at the time of writing.
Crude Oil prices are bolstered by expectations of increased fuel demand this summer. According to Reuters, analysts at the energy consulting firm Gelber and Associates noted, "Futures are higher as expectations of summer demand are supportive of prices despite the broader macro landscape remaining less optimistic than weeks previous."
In Canada, the unemployment rate rose to a more than two-year high of 6.2% in May. However, the economy added more jobs than expected, and there was a notable increase in wage growth. Traders are likely to observe the BoC Governor Tiff Macklem as he is scheduled to speak on Wednesday at the Conference of Montreal 2024, where he will participate in a panel discussion about inflation.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD retakes 0.6000 on the road to recovery amid US-China trade war
AUD/USD is off the five-year low but remains heavy near 0.6000 in the Asian session on Monday. The pair continues to suffer from a US-China trade war as US President Trump said that he would not do a deal with China until the US trade deficit was sorted out.
USD/JPY attempts tepid recovery above 146.00
USD/JPY kicks off the new week on a weaker note, though it manages to stage a tepid recovery above 146.00 early Monday. The global carnage, amid the mounting risk of a recession and a trade war led by Trump's sweeping tariffs, keeps the safe-haven Japanese Yen underpinned at the expense of the US Dollar.
Gold holds the bounce above $3,000 amid Asia risk-off profile
Gold price recovers ground above $3,000 in the Asian session on Monday. The global market turmoil extends and hence, Gold buyers manage to find their feet as trade war and recession risks escalate and revive the haven demand for the yellow metal after Friday's 'sell everything' mode.
Bitcoin could be the winner in the ongoing trade war after showing signs of decoupling from stocks
Bitcoin traded above $84,000 on Friday, showing strength despite the stock market experiencing significant declines. The market reaction stems from United States President Donald Trump's clash with the Federal Reserve Chairman Jerome Powell over interest rate decisions.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.