USD/CAD treads water near 1.3600 amid higher Crude oil prices
- USD/CAD attempts to continue its winning streak on Monday.
- Fed member Bostic forecasted only one interest rate cut instead of his earlier projection of two rate cuts in 2024.
- The higher WTI price might have provided support for the Canadian Dollar.
USD/CAD maintains its position in positive territory after paring back some gains on Monday. The pair trades higher around 1.3600 during the Asian trading session, following hawkish remarks from Federal Reserve Bank of Atlanta President Raphael Bostic on Friday. Bostic adjusted his earlier projection of two interest rate cuts this year, now forecasting only one, citing persistent inflation and stronger-than-expected economic indicators.
Moreover, the Canadian Dollar (CAD) faced downward pressure as the Bank of Canada (BoC) hinted at potential rate cuts in 2024 in its latest meeting minutes. Deputy Governor Toni Gravelle reaffirmed the central bank's intention for quantitative tightening to conclude by 2025, highlighting its sustainability amidst gradual interest rate reductions.
The CAD receives support from higher Crude oil prices, which in turn limits the losses of the USD/CAD pair. Additionally, better-than-anticipated Canadian Retail Sales data might have contributed to bolstering the Canadian Dollar.
The US Dollar Index (DXY) declines to near 104.40 as the 2-year and 10-year yields on US Treasury bonds hold at 4.60% and 4.21%, respectively, at the time of reporting. Despite the uptick in US Treasury yields, the US Dollar (USD) fails to find support.
Federal Reserve Chair Jerome Powell mentioned during a press conference, that an unexpected increase in unemployment could prompt the central bank to consider reducing interest rates. Powell also reassured markets that the Federal Reserve would not hastily react to consecutive months of heightened inflation figures.
Market participants will likely monitor the release of Gross Domestic Product (GDP) data for the fourth quarter of 2023 from the United States (US). Additionally, attention will be on Canadian GDP data for January, scheduled for release on Thursday.
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.
