- USD/CAD attracts some intraday sellers on Thursday amid a weaker US Dollar.
- The BoC’s hawkish pause underpins the CAD and contributes to the downtick.
- Rebounding US bond yields and a softer risk tone to limit further USD losses.
The USD/CAD pair struggles to capitalize on the Asian session uptick on Thursday and languishes near the 1.3500 psychological mark, just above a one-week low touched the previous day.
Mixed signals on the Federal Reserve's (Fed) rate-cut path fail to assist the US Dollar (USD) to register any meaningful recovery from its lowest level since early February, which, in turn, is seen acting as a headwind for the USD/CAD pair. Fed Chair Jerome Powell told US lawmakers on Wednesday that the central bank will cut interest rates this year, though wants to see more evidence that inflation is falling to the 2% target. Minneapolis Fed President Neel Kashkari, however, downplayed speculations about more aggressive policy easing and said that he may reduce the number of cuts this year, possibly to only one in the wake of the incoming stronger US macro data.
The Canadian Dollar (CAD), on the other hand, continues to draw support from a hawkish hold from the Bank of Canada (BoC) on Wednesday. Meanwhile, subdued Crude Oil prices do little to provide any meaningful impetus to the commodity-linked Loonie. Furthermore, the yield on the benchmark 10-year US government bond rebounds from a one-month low touched on Wednesday, which, along with a generally softer tone around the equity markets, acts as a tailwind for the safe-haven buck. This, in turn, should help limit any meaningful downside for the USD/CAD pair and warrants some caution before positioning for any further depreciating move.
Moving ahead, investors now look to Fed Chair Powell's second day of testimony before the Senate Banking Committee. Apart from this, traders will take cues from Thursday's economic docket – featuring the US Weekly Initial Jobless Claims, and Trade Balance figures from the US and Canada. This, along with the US bond yields and the broader risk sentiment, will influence the USD demand and provide some impetus to the USD/CAD pair.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds steady near 1.0500 ahead of FOMC Minutes
EUR/USD trades marginally higher on the day near 1.0500. The US Dollar struggles to preserve its strength amid a modest improvement seen in risk sentiment, helping EUR/USD hold its ground before the Fed publishes the minutes of the November policy meeting.
GBP/USD struggles to hold above 1.2600
GBP/USD loses its traction and trades below 1.2600 after rising above this level earlier in the day. Nevertheless, the pair's losses remain limited as the US Dollar struggles to find demand following mixed data releases. Markets await FOMC Minutes.
Gold under pressure below $2,630
Gold fluctuates above $2,600 on Tuesday after sliding almost three percent – a whopping $90 plus – on Monday due to rumors Israel and Hezbollah were on the verge of agreeing on a ceasefire. Whilst good news for Lebanon, this was not good news for Gold as it improved the outlook for geopolitical risk.
Trump shakes up markets again with “day one” tariff threats against CA, MX, CN
Pres-elect Trump reprised the ability from his first term to change the course of markets with a single post – this time from his Truth Social network; Threatening 25% tariffs "on Day One" against Mexico and Canada, and an additional 10% against China.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.