USD/CAD holds above 1.3650 ahead of US PPI data
|- USD/CAD holds positive ground near 1.3675 on Tuesday.
- Fed officials said in recent comments that the high-for-longer interest rate narrative is needed to bring down inflation.
- The lower crude oil price weighs on the commodity-linked Canadian Dollar (CAD).
The USD/CAD pair trades on a stronger note around 1.3675 during the Asian session on Tuesday. Amid the light week in terms of Canadian economic data, investors will keep an eye on the US Producer Price Index (PPI) on Tuesday and, the Consumer Price Index (CPI) on Wednesday.
Several Federal Reserve (Fed) officials stated in recent weeks that the current level of interest rate should be held higher for longer to bring down inflation. During the press conference, Fed Chair Jerome Powell said that an interest rate hike was “unlikely,” but he did not fully rule it out. Powell emphasized the need to take more time to gain “greater confidence” that inflation is moving towards the Fed’s 2% target.
Dallas Fed President Lorie Logan said that there are upside risks to inflation, adding that it is too soon to cut interest rates. The high-for-longer US rate narrative is likely to underpin the Greenback and create a tailwind for USD/CAD for the time being.
On the other hand, the decline in crude oil price continues to drag the commodity-linked Canadian Dollar (CAD) lower, as Canada is the leading exporter of oil to the United States. Nonetheless, the upbeat Canadian employment market data for April might convince the Bank of Canada (BoC) to wait longer t to ensure that inflation will be sustained. This, in turn, might cap the downside of the CAD.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.