USD/CAD trades close to weekly low around 1.4030 as Fed rate cut bets remain firm

USD/CAD clings to Wednesday’s losses around 1.4030 amid firm Fed dovish bets.
Fed’s Williams supported more interest rate cuts last week, while warning job market risks.
Investors await Canada Q3 GDP, and the US ISM Manufacturing PMI data.

Sagar Dua FXStreet

The USD/CAD pair holds onto Wednesday’s losses around 1.4030 during the Asian trading session on Thursday. The Loonie pair has been under pressure as the US Dollar (USD) remains fragile due to firm expectations that the Federal Reserve (Fed) will cut interest rates again this year.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.12% to near 99.45. This is the lowest level seen in over a week.

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.82%	-1.18%	-0.33%	-0.46%	-1.09%	-1.82%	-0.69%
EUR	0.82%		-0.37%	0.49%	0.36%	-0.28%	-1.00%	0.13%
GBP	1.18%	0.37%		0.85%	0.73%	0.09%	-0.64%	0.50%
JPY	0.33%	-0.49%	-0.85%		-0.14%	-0.81%	-1.61%	-0.35%
CAD	0.46%	-0.36%	-0.73%	0.14%		-0.62%	-1.34%	-0.23%
AUD	1.09%	0.28%	-0.09%	0.81%	0.62%		-0.72%	0.43%
NZD	1.82%	1.00%	0.64%	1.61%	1.34%	0.72%		1.15%
CHF	0.69%	-0.13%	-0.50%	0.35%	0.23%	-0.43%	-1.15%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The CME FedWatch tool shows that the probability of the Fed to cut interest rates in the December policy meeting has increased to 84.7% from 30.1% seen a week ago.

Traders have become increasingly confident about the Fed reducing interest rates in the December policy meeting, following dovish comments from New York Fed Bank President John Williams, who is the permanent Federal Open Market Committee (FOMC) voting member.

Last week, Fed’s Williams supported the need of further interest rate adjustment for the year, citing downside labour market risks.

In Thursday’s session, the action in the US Dollar is expected to remain light as United States (US) markets will be closed on account of Thanksgiving Day.

Going forward, investors will focus on the US ISM Manufacturing Purchasing Managers’ Index (PMI) data for November, which will be released on Monday.

Meanwhile, the Canadian Dollar (CAD) trades broadly calm ahead of the Q3 Gross Domestic Product (GDP) data, which is scheduled for Friday. Statistics Canada is expected to show that the economy expanded by 0.5% on an annualized basis after declining 1.6% in the previous quarter.

Economic Indicator

Gross Domestic Product (QoQ)

The Gross Domestic Product (GDP), released by Statistics Canada on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in Canada during a given period. The GDP is considered as the main measure of Canada’s economic activity. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.

AUD/USD hangs below mid-0.7100s amid bullish USD, ahead of FOMC meeting

AUD/USD remains on the back foot during the Asian session on Tuesday, close to an over three-week low touched the previous day. US bond yields hold near multi-year highs ahead of the FOMC meeting and oil-driven inflation risks, supporting the US Dollar and weighing on the currency pair. However, rising RBA rate-hike bets could limit deeper losses for the Aussie.

USD/JPY sticks to gains near mid-154.00s as traders await Fed/BoJ meetings

USD/JPY attracts some buyers for the second straight day on Tuesday, though it remains below a one-week high touched the previous day as traders await the FOMC and BoJ meetings this week. Meanwhile, Fed rate-hike bets and oil-driven inflation risks keep US bond yields near multi-year highs, supporting the US Dollar and the currency pair. That said, a more hawkish repricing of the BoJ normalization path might continue to underpin the Japanese Yen and cap spot prices.

Gold seems vulnerable below $4,300 as traders await FOMC meeting

Gold struggles below $4,300 during the Asian session on Tuesday and remains vulnerable near a one-month low, touched the previous day. Fed rate-hike expectations and inflation concerns remain supportive of elevated US bond yields, underpinning the US Dollar and weighing on the non-yielding bullion. Bears, however, might wait for the outcome of a two-day FOMC meeting on Wednesday before placing fresh bets.

Bitcoin pushes past $79K as markets anticipate Fed meeting, Strategy stays put

Bitcoin rose above $79,000 on Monday as the broader crypto market enters a closely watched week for policymakers. According to QCP analysts, markets have largely priced in a 25-basis-point Federal Reserve rate increase after the release of August inflation data last week. The focus has shifted toward how policymakers communicate their outlook for future rate moves.

Eight reasons why the Fed should raise rates

The FOMC meeting on September 15–16 is expected to mark a turning point with the Fed’s first rate hike since May 2023. While there may have been economic reasons to hold off and maintain the status quo until now (some negative signals on the employment front and some encouraging ones on the inflation front), the conditions for a necessary recalibration now appear to be in place.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.