USD/CAD Holds Key Support At 1.3700

USD/CAD remained well supported above the 1.3700 round number mark during the European session on Tuesday. The dollar rebounded after a small correction, allowing the currency pair to hold gains. The U.S. Dollar Index (DXY), which tracks the value of the U.S. dollar against six major currencies, remained higher above 105.00 as Federal Reserve (Fed) policymakers continued to advocate for one rate cut this year.

Fed officials acknowledged that consumer and producer inflation reports were weaker than expected, but they did not want to rush into rate cuts before seeing inflation fall for several consecutive months to gain significant confidence.

Contrary to the Fed’s latest rate forecasts, market speculation has increased for two rate cuts this year. The CME FedWatch tool shows that the rate cut process will start from the September meeting, followed by a rate cut in the November or December meeting.

Meanwhile, investors turned their focus to the U.S. retail sales data for May, which will be released at 20:30 Beijing time. Retail sales, a key indicator of consumer spending, are estimated to have increased by 0.3% in May after growing 0% in April. Strong consumer spending points to a stubborn inflation outlook and will dampen hopes for a September rate cut, while weak data would do the opposite.

On the Canadian dollar front, expectations of a further rate cut by the Bank of Canada (BOC) at its July meeting continued to push the Canadian dollar lower. The Bank of Canada cut rates by 25 basis points as expected at its June policy meeting. The Bank of Canada’s preferred inflation measure – the core consumer price index (CPI) (excluding various volatile items) – has fallen below its 2% target, and the unemployment rate has risen to 6.2%, forcing the Bank of Canada to begin easing its restrictive interest rate framework.

USD latest articles

Popular exchange rates

foreign exchange

fxcurrencyconverter is a forex portal. The main columns are exchange rate, knowledge, news, currency and so on.

© 2023 Copyright