USD/CAD extends downside to 1.3670 with focus on BoC’s Macklem speech
- USD/CAD declines further to 1.3670 ahead of BoC’s Macklem speech.
- Canadian annual headline CPI is estimated to have declined to 2.6%.
- Fed policymakers want to see inflation declining for months before shifting to rate cuts.
The USD/CAD pair extends its losing streak for the seventh trading session on Monday. The Loonie asset weakens as the US Dollar Index (DXY) corrects to near 105.66 after failing to extend upside above the crucial resistance of 106.00. The US Dollar (USD) drops as investors shift to risk-perceived assets amid expectations that the Federal Reserve (Fed) will deliver two rate cuts this year.
S&P 500 futures have posted decent gains in the European session, exhibiting a higher risk appetite of investors. 10-year US Treasury yields edge down to 4.25%.
Contrary to market expectations, Fed policymakers signalled in latest interest rate projections that there will be only one rate-cut this year. The Fed continues to reiterate the same despite May’s Consumer Price Index (CPI) report showed that price pressured eased more than expected.
Richmond Fed Bank President Thomas Barkin said on Friday that he wants more conviction before moving on rate cuts. Fed officials would get more conviction after seeing inflation declining for months.
Meanwhile, the Canadian Dollar strengthens even though investors expect that the Bank of Canada (BoC) will deliver subsequent rate cuts. For more clarity on the interest rate outlook, investors will look to the speech from BoC Governor Tiff Macklem, which is scheduled at 17:00 GMT.
This week, investors will also focus on the Canadian CPI report for May, which will be published on Tuesday. Annual headline CPI is expected to have decelerated to 2.6% from 2.7% in April.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
