USD/CAD Nears Weekly Low, Hovering Around 1.3500 Amid USD Weakness

On Thursday, USD/CAD sees some selling pressure during the day due to a weaker US Dollar. The Canadian Dollar (CAD) supports the Bank of Canada’s (BoC) decision to maintain its hawkish stance, contributing to the pair’s downward movement. Despite a rebound in US bond yields and a softer risk tone, the USD struggles to recover significantly, keeping the pair near the 1.3500 psychological level, slightly above a one-week low reached earlier.

The Federal Reserve’s (Fed) stance on interest rate cuts presents mixed signals. Chair Jerome Powell indicates a potential rate cut this year but emphasises the need for evidence of inflation falling to the 2% target. Conversely, Minneapolis Fed President Neel Kashkari downplays speculations of aggressive policy easing, hinting at possibly fewer rate cuts amid more robust US macro data.

Meanwhile, the CAD benefits from the BoC’s hawkish stance, while subdued crude oil prices offer little support. The rebound in US bond yields and a softer equity market tone act as a tailwind for the USD, limiting significant downside for the USD/CAD pair.

Investors focus on Powell’s second day of testimony before the Senate Banking Committee. Additionally, economic data releases, including US Weekly Initial Jobless Claims and Trade Balance figures from both the US and Canada, along with US bond yields and broader risk sentiment, will impact USD demand and provide further direction for the USD/CAD pair.

USD/CAD