USD/CAD consolidates around 1.3540, focus on Canada’s CPI data
- USD/CAD exhibits sideways movement with a positive bias to extend gains.
- Fed could uphold its elevated interest rates to curb inflationary pressures.
- Canadian Consumer Prices are expected to show an increase in February.
USD/CAD continues its upward trend for the fourth consecutive session, trading near the significant level of 1.3540. The US Dollar (USD) advances, propelled by higher US Treasury yields. Bond markets are facing selling pressure as additional signs of resilience in the United States (US) economy emerge, prompting traders to revise their expectations for fewer interest rate cuts this year.
According to the CME FedWatch Tool, the probability of a rate cut in March stands at 1.0%, and 8.7% for May. The likelihood of rate cuts in June and July is lower, at 55.1% and 73.7%, respectively.
The US Dollar Index (DXY) continues its upward trajectory, with 2-year and 10-year US yields at 4.73% and 4.32%, respectively. Investors are eagerly awaiting the interest rate decision from the US Federal Reserve (Fed), expected to be announced on Wednesday. The Fed is anticipated to uphold its elevated interest rates in response to recent inflationary pressures.
The Canadian Dollar (CAD) might have found support from the surge in Crude oil prices, considering Canada's status as the largest oil exporter to the United States (US). West Texas Intermediate (WTI) hovers around $82.10 per barrel, nearing its highest levels since early November, bolstered by ongoing supply-side worries.
On Monday, the Canadian stock market closed slightly lower as investors awaited Canada's Consumer Price Index (CPI) data scheduled for Tuesday. There are expectations for an uptick in Canadian consumer prices.
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
