- USD/CAD trades on a stronger note near 1.3665 on Tuesday.
- The FOMC is widely expected to hold rates steady in its current 5.25%–5.50% range on Wednesday.
- The further downside of oil prices weighs on the commodity-linked Loonie.
The USD/CAD pair posts modest gains around 1.3665 on Tuesday during the early Asian trading hours. A modest rebound of the US Dollar (USD) provide some support to the pair. Meanwhile, the decline in oil prices weighs on the commodity-linked Loonie. Investors will keep an eye on the Canadian February Gross Domestic Product (GDP) growth number. The attention will shift to the Federal Open Market Committee's (FOMC) interest rate decision on Wednesday.
The US Federal Reserve’s (Fed) policymakers see no urgency in lowering rates. Fed Governor Michelle Bowman said she sees “upside risks” to inflation. Meanwhile, Minneapolis Fed President Neel Kashkari floated the possibility of having no rate cuts this year. Atlanta Fed’s Raphael Bostic said he could favor hiking them if inflation gets worse. The US Fed’s higher-for-longer rate narrative lifts the Greenback and creates a tailwind for the USD/CAD pair.
The FOMC is widely expected to leave rates unchanged in their current 5.25%–5.50% range on Wednesday. Investors will closely monitor the tone of the FOMC statement and press conference. If the US central bank remains hawkish, this might strengthen the USD and attract more foreign capital inflows. On the other hand, the dovish tone might exert some selling pressure on the Greenback.
On the Loonie front, traders expect the Bank of Canada (BoC) to wait until June or July to start cutting its policy rate. The monthly Gross Domestic Product (GDP) data for February might offer some hints about how the Canadian economy performs. In case the report shows weaker-than-expected data, this might allow the Bank of Canada (BoC) to pivot to interest rate cuts sooner and weigh on the CAD. Meanwhile, the further downside of oil prices might exert some selling pressure on the Loonie, as Canada is the largest crude oil exporter to the United States (US).
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 drops to 0.6650 on risk-off mood
AUD/USD has come under fresh selling pressure, dropping near 0.6650 amid broad risk-aversion-led US Dollar demand in Asian trades on Tuesday. The pair fails to find any inspiration from the RBA's hawkish Minutes. More Fedspeak awaited.
USD/JPY extends gains to near 156.50, tracking positive US yields
USD/JPY is extending previous gains to test 156.50, despite the comments from Japan's Finance Minister Shunichi Suzuki. The pair stays supported amid an uptick in the US Treasury bond yields and the US Dollar after Fed officials adopted a cautious stance on the inflation and policy outlook.
Gold price extends its upside as investors bet on rate cuts
Gold price extends the rally on Tuesday after retracing from a record high earlier. The renewed gold demand is bolstered by higher bets on interest rate cuts from the US Federal Reserve, ongoing geopolitical tensions, along with the strong demand stemming from central banks and Asian buyers.
New York Attorney General reaches $2 billion settlement with Genesis after claims of fraud
After a lawsuit filed by the New York Attorney General against crypto lender Genesis in late 2023, the company reached a settlement of $2 billion with the AG on Monday.
The market-moving data this week comes from everywhere other than the US
The market-moving data this week comes from everywhere other than the US. We get inflation from the UK, Canada, and Japan, possibly shifting central bank outlooks. The Fed releases FOMC minutes on Wednesday. And we get a slew of PMI’s on Thursday.