USD/CAD holds below the 1.3600 barrier, eyes on BoC rate decision
- USD/CAD remains flat around 1.3575 in Tuesday’s early Asian session.
- Fed’s Bostic said there’s no urgency to cut interest rates given the US economy's strength.
- The BoC is expected to hold rates at 5% at its June meeting on Wednesday.
The USD/CAD pair holds below the 1.3600 barrier during the early Asian trading hours on Tuesday. The Bank of Canada (BoC) will announce the interest rate decision on Wednesday, with no change in rate expected. Meanwhile, the decline in oil prices weighs on the Loonie and provides some support to the USD/CAD pair. At press time, the pair is trading at 1.3575, unchanged for the day.
The Federal Reserve (Fed) is expected to maintain the benchmark interest rate in the 5.25% to 5.5% range at its March meeting. The financial market has priced in the first rate cuts in June, but this might change if inflation stalls or wages continue to beat forecasts. Fed President Raphael Bostic said on Monday that the central bank is under no urgent pressure to cut interest rates given a prospering economy and job market.
On the other hand, the Bank of Canada (BoC) is widely expected to hold its key interest rate at 5.0% on Wednesday. Investors have priced an 80% odd that the first rate cut to come in around June. The press conference might offer some hints about the timing of rate cuts. Dovish remarks from the BoC governor could exert some selling pressure on the Canadian Dollar (CAD).
Market players will focus on the US ISM Services PMI, which is estimated to ease from 53.4 in January to 53.0 in February. Later this week, Fed Chairman Jerome Powell’s Senate testimony will be a closely watched event ahead of the US Nonfarm Payrolls (NFP) on Friday.
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
