- USD/CAD gains grounds on higher US Treasury yields.
- Fed’s Bostic anticipates that the first Fed rate cut around the end of this year.
- The higher WTI price could provide support for the Canadian Dollar.
USD/CAD improves higher to near 1.3570 during the European session on Monday amid a stable US Dollar (USD) with improved US Treasury yields. Atlanta Fed President Raphael W. Bostic has expressed his expectation that the first cut in interest rates would likely be appropriate, possibly occurring towards the end of this year at the earliest, which provides some support for the US Dollar (USD).
According to the CME FedWatch Tool, the probability of rate cuts in March stands at 5.0%, while the likelihood of cuts in May and June is estimated at 26.8% and 53.8%, respectively.
However, the US Dollar (USD) faced downward pressure following a subdued February’s manufacturing figures from the United States (US). The US ISM Manufacturing PMI for February dropped to 47.8 from 49.1, significantly missing the market expectation of 49.5 reading. Additionally, the Manufacturing New Orders Index decreased to 49.2 from the previous 52.5 reading.
However, Higher Crude oil prices might have supported the Canadian Dollar (CAD), consequently, putting a cap on the upside of the USD/CAD pair. West Texas Intermediate (WTI) oil price edges higher to near $79.70 per barrel, by the press time.
The increase in Crude oil prices followed the Organization of the Petroleum Exporting Countries and its allies (OPEC+) decision to extend voluntary oil output cuts, along with extended tensions between the Middle East.
Traders await the Bank of Canada’s (BoC) policy meeting scheduled on Wednesday. Market expectations suggest that the central bank will maintain its current interest rate at 5.0%.
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