- USD/CAD faces pressure following comments from Federal Reserve Chair Powell on potential monetary policy changes.
- Powell’s dovish guidance has negatively impacted the US dollar.
- Market participants are awaiting key data on US durable goods, PCE inflation, and Canada’s GDP.
The USD/CAD pair is struggling to find stability during Monday’s Asian trading session, having dropped nearly 0.8% on Friday to around 1.3820. The decline has been influenced by remarks from Jerome Powell made at the Jackson Hole symposium on Friday.
During the Asian session, the US Dollar Index (DXY), which gauges the dollar’s strength against six major currencies, has shown a slight uptick. Nevertheless, it’s hovering near a four-week low, falling below 98.00.
Powell mentioned, “Even as policy remains tight, there may be a need to adjust our approach given the delicate balance between the outlook and evolving risks.” He pointed out an increase in employment challenges, while acknowledging that inflation risks are tilting upwards.
The CME FedWatch tool indicates a significant 87% probability that the Fed will lower interest rates during its meeting in September.
This week, investors are particularly interested in the July orders for US durable goods and the personal consumption expenditure (PCE) price index data.
Meanwhile, in Canada, attention will be on the GDP data for June and the second quarter, set to be released on Friday. Analysts expect the Canadian economy to have contracted at the same pace as in May, followed by a modest growth of 0.1% in June.
