- Fed officials unanimously aim for the 2% inflation target, but divisions arise on the next steps.
- The US Dollar Index (DXY) reflects the greenback’s strength, rising 0.29% to 103.497, supported by rising US Treasury bond yields.
- USD/CAD’s bullish momentum is evident as it trades above the 200-day Moving Average, with key levels around the 1.3545 high and the R1 pivot at 1.3520.
USD/CAD climbs above 1.3500 and refreshes a three-month high at 1.3539 after the Federal Open Market Committee (FOMC) revealed its July monetary policy minutes, offering split views amongst Fed board members while committing to its goal of inflation of 2%. The USD/CAD is trading at around 1.3520/40 amidst a volatile session, with more than 0.20% gains.
Federal Reserve’s divided stance on rate hikes propels the pair above the 1.3500 mark, with the greenback gaining ground
The minutes highlighted a unanimous commitment among all Federal Reserve officials to their goal of reducing inflation to the targeted 2%. Concurrently, most participants evaluated that the potential for elevated inflation risks would necessitate additional tightening measures.
However, a division within the Fed board became evident regarding monetary policy, as a “few” members advocated for maintaining the existing interest rates. Among them, Atlanta’s Fed President Raphael Bostic consistently voiced his stance in favor of unchanged rates. Recently, Philadelphia’s Fed President Patrick Harker echoed some of Bostic’s comments as it turned more neutral.
Despite the economy’s demonstrated resilience, lingering concerns remain about potential downward impacts on economic activity and the potential risks associated with a rise in the unemployment rate.
Federal Reserve officials agreed that forthcoming rate decisions would be based on a comprehensive assessment of incoming data while adopting a cautious approach in the upcoming months.
Amid these developments, the greenback is recovering some ground, as shown by the US Dollar Index (DXY) gaining 0.29%, at 103.497, underpinned by higher US Treasury bond yields.
USD/CAD Reaction
Following the data release, the USD/CAD edged towards its daily high of 1.3545, followed by a dip towards the R1 pivot at 1.3520, before edging towards the current exchange rate. The USD/CAD is trading back above the 200-day Moving Average (DMA), which sits at 1.3448, portraying a bullish bias.
USD/CAD Technical Levels
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 above 1.0550 on modest USD weakness
EUR/USD struggles to gather recovery momentum but clings to modest daily gains above 1.0550 in the second half of the day on Monday. Although the US Dollar corrects lower following the previous week's rally, the cautious market mood makes it hard for the pair to push higher.
GBP/USD stabilizes above 1.2600 following previous week's drop
GBP/USD defends minor bids above 1.2600 in the American session on Monday, while the negative shift seen in risk sentiment caps the pair's upside. The Bank of England Monetary Policy Hearings and UK inflation data this week could influence Pound Sterling's valuation.
Gold benefits from escalating geopolitical tensions, rises above $2,600
After suffering large losses in the previous week, Gold gathers recovery momentum and trades in positive territory above $2,600 on Monday. In the absence of high-tier data releases, escalating geopolitical tensions help XAU/USD hold its ground.
Bonk holds near record-high as traders cheer hefty token burn
Bonk (BONK) price extends its gains on Monday after surging more than 100% last week and reaching a new all-time high on Sunday. This rally was fueled by the announcement on Friday that BONK would burn 1 trillion tokens by Christmas.
The week ahead: Powell stumps the US stock rally as Bitcoin surges, as we wait Nvidia earnings, UK CPI
The mood music is shifting for the Trump trade. Stocks fell sharply at the end of last week, led by big tech. The S&P 500 was down by more than 2% last week, its weakest performance in 2 months, while the Nasdaq was lower by 3%. The market has now given back half of the post-Trump election win gains.
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.