USD/CAD is subdued around 1.3530s as traders are in wait-and-see mode

The USD/CAD is barely unchanged ahead of the FOMC’s minutes release, though slightly tilted to the downside, with losses of 0.05%. Traders worried that the Fed would raise rates further than expected, dampening the market mood during the last couple of weeks. At the time of typing, the USD/CAD is trading at around 1.3530s.

USD/CAD turns negative, drops 0.06%, before FOMC’s minutes release

Wall Street’s bulls are taking a respite before the Fed releases its minutes. US economic data throughout the last two weeks justified the need for further tightening, meaning a higher USD/CAD exchange rate. Inflation data in the US slowed down, except for the monthly readings of the Producer Price Index (PPI), which came above estimates and the prior’s month data. In addition, a Fed regional manufacturing index reported on its survey that prices jumped the most in 10 months, exacerbating a reassessment of how high the Fed will go. Therefore, worried investors turned to safety and bought the US Dollar (USD).

Consequently, the US 10-year Treasury bond yield spiked 40 basis points (bps) and underpinned the greenback.

Aside from this, the Canadian side revealed that inflation cooled down, a sign for the Bank of Canada (BoC) to pause its hiking cycle. Meanwhile, New Home Prices in Canada dived 0.2% in January from December data from Statistics Canada showed on Wednesday, but the annual rate slowed to 2.7%.

Hence, the USD/CAD broke above 1.3500 after trading sideways for almost two months. Nevertheless, the major faced a four-month-old resistance trendline and was rejected after hitting multi-week highs at 1.3560 and dropping toward 1.3520s.

What to watch?

USD/CAD Key technical levels