- USD/CAD is regaining some positive momentum amid continued USD buying interest.
- Weak oil prices have weakened the Canadian dollar, providing further support to major currencies.
- Traders are now focused on a speech by Bank of Canada Governor Macklem ahead of the release of the U.S. Consumer Price Index on Wednesday.
In the Asian session on Tuesday, the USD/CAD pair attracted buyers but lacked follow-through, remaining stuck within the previous day's trading range. The spot price is currently hovering around 1.3565, registering a daily increase of less than 0.10% and below the 200-day simple moving average (SMA).
Oil prices are struggling to capitalize on an overnight rebound from their lowest since June 2023 amid concerns about a slowdown in China, the world's largest importer. The concerns are fueled by the latest Chinese trade balance data, which showed the country's imports were flat in August compared to a 6.6% increase in the previous month, suggesting weak domestic demand. Separately, disappointing Canadian employment data on Friday has raised hopes of further interest rate cuts by the Bank of Canada (BoC), weakening the commodity-linked Canadian dollar and providing a boost to the USD/CAD pair.
Meanwhile, the US Dollar (USD) continues to receive support as expectations of a significant 50 basis points (bps) interest rate cut by the Federal Reserve (Fed) in September have dwindled following Friday's release of the US Non-Farm Payrolls (NFP). This is seen as another factor that will provide some support to the USD/CAD pair, but bulls should be cautious as buying did not continue ahead of Bank of Canada Governor Tiff Macklem's speech earlier in the day. Investors may also prefer to stay on the sidelines ahead of the US inflation data, which will play a key role in influencing the USD.
The crucial US Consumer Price Index (CPI) is released on Wednesday, followed by the Producer Price Index (PPI) on Thursday. The data will determine market expectations regarding the size of the Fed's interest rate cut scheduled for later this month and the demand for the US dollar. This, along with the movement of oil prices, should provide a meaningful impetus for the USD/CAD pair and help determine its next direction.
Economic indicators
Speech by Governor Macklem of the Bank of Canada
Tiff Macklem appointed Governor of the Bank of CanadaMr. Macklem became Governor of the Bank of Canada on June 3, 2020. As Governor, he also serves as Chair of the Bank's Board of Directors. Prior to his appointment as Governor of the Bank of Canada, Mr. Macklem served as Dean of the Rotman School of Management at the University of Toronto for six years. He had previously served as Senior Deputy Governor of the Bank of Canada from July 2010 to May 2014. Mr. Macklem also served as the first Chair of the Financial Stability Board's Standing Committee on Standards Implementation from 2009 to 2013, and represented the Bank of Canada on the FSB.
Next release: Tuesday, September 10, 2024 12:25
frequency: Irregular
consensus: –
Previous: –
sauce: Bank of Canada
