USD/CAD posts modest losses around 1.3725 in Wednesday’s early Asian session.
Fed’s Powell said central bank will continue to wait and see how the economy evolves before deciding whether to cut its rate.
Canada CPI inflation remained unchanged at 1.7% YoY in May as expected.
The USD/CAD pair trades with mild losses near 1.3725 during the early Asian session on Wednesday. The US Dollar (USD) weakens against the Canadian Dollar (CAD) amid easing Middle East tensions. Investors will keep an eye on Federal Reserve (Fed) Chair Jerome Powell testifies later on Wednesday.
Investors bet that a delicate ceasefire between Israel and Iran will hold. A ceasefire between Iran and Israel begins following four waves of Iranian attacks on Israeli-occupied territories. US President Donald Trump said on Tuesday a ceasefire was now in place and asked both countries not to violate it. Easing tensions in the Middle East and risk-on sentiment could weigh on the Greenback in the near term.
Fed Chair Powell reiterated his stance that policymakers should not hurry to adjust policy, contradicting recent comments from Fed Governors Christopher Waller and Michelle Bowman, who said that the two would be open to lowering rates as soon as July. Money markets have fully priced in two Fed reductions by the end of 2025, with a first move in September far more likely than next month, though expectations of a July reduction rise from last week.
Data released by Statistics Canada on Tuesday showed that the country’s Consumer Price Index (CPI) rose 1.7% on a yearly basis in May versus 1.7% prior. This reading aligned with market expectations. On a monthly basis, the CPI rose 0.6% in May, compared to a 0.1% decline reported in April. This reading surpassed the market expectation of 0.5%.
Meanwhile, the extended decline in Crude Oil prices might undermine the commodity-linked Loonie and cap the downside for the pair. It’s worth noting that Canada is the largest oil exporter to the US, and lower crude oil prices tend to have a negative impact on the CAD value.
* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
