USD/CAD moves sideways after recent losses, clings to 1.3540
- USD/CAD treads water to hold ground post recent declines.
- The decline in the WTI price weighs on the Canadian Dollar.
- Fed’s Goolsbee suggested that the Fed may consider rate cuts despite upbeat consumer prices.
USD/CAD makes an effort to recover its recent declines observed in the previous session, spurred by a muted US Dollar (USD) possibly due to decreased US bond yields. The pair is hovering around 1.3540 during the Asian session on Thursday. Additionally, the drop in Crude oil prices might exert downward pressure on the Canadian Dollar (CAD), consequently providing support for the USD/CAD pair.
West Texas Intermediate (WTI) Crude oil price continues its downward trend for the second consecutive day, primarily driven by a larger-than-expected increase in US Crude oil inventories. This significant buildup in inventories outweighs concerns about potential supply disruptions stemming from geopolitical tensions in the Middle East. As a result, the WTI price declines to near $76.10 per barrel at the moment of writing.
The USD/CAD pair has encountered challenges amid prevailing market sentiment, which now strongly suggests that the Federal Reserve (Fed) will keep interest rates unchanged in the upcoming meeting. According to the FedWatch Tool, the probability of the Fed maintaining interest rates in the March meeting has surged to nearly 90%. Additionally, there is a modest 37% probability of a rate cut in May, with the likelihood of a 25 basis points (bps) rate cut increasing to approximately 53% in May.
Furthermore, improved risk appetite sentiment has led to a decline in US Treasury yields, with the 2-year and 10-year US yields standing at 4.55% and 4.23%, respectively, by the press time. Moreover, Chicago Fed President Austan Goolsbee's remarks on Wednesday sought to assuage market concerns by suggesting that a higher-than-anticipated reading on consumer prices does not necessarily mean that the Federal Reserve won't consider lowering interest rates in 2024.
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.
