English
Ahead of the Release of the US PMI Data, the USD/CAD Price Declines Below 1.3700
In the early Asian session of Friday, USD/CAD is trading in negative territory for the sixth day in a row, at approximately 1.3690. The central bank is well-positioned with the requisite capacity to perform its duties, according to Fed's Birkin. However, it is imperative to preserve a data-dependent approach.The Loonie is supported by the rekindled optimism regarding a midsummer increase in fuel demand, which has resulted in higher crude oil prices.
During the early Asian session on Friday, the USD/CAD pair is still experiencing some selling pressure at approximately 1.3690. The pair is drifting downward, despite the USD Index (DXY) reaching four-day highs near 105.70. The commodity-linked Loonie remains supported by the ongoing increase in crude oil prices. The advanced US S&P Global Manufacturing and Services PMI will be at the stoplight on Friday.
The initial interest rate reduction of the year was postponed by the policymakers of the United States Federal Reserve (Fed). Tom Barkin, President of the Federal Reserve Bank of Richmond, stated on Thursday that the central bank is adequately equipped with the requisite resources to complete the task, but it will acquire additional knowledge over the course of the next few months. Meanwhile, Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, stated that it is likely that it will take one to two years to restore inflation to 2%, as reported by Reuters.
As per the CME FedWatch Tool, the financial markets have anticipated a rate cut in July at approximately 10%, which increased to nearly 70% in September and is entirely priced in for November. Despite the fact that the recent US Retail Sales last week prompted the expectation of two rate cuts from the Fed this year, a strict data-dependent approach from Fed officials could limit the downside for the Greenback against its rivals.
On the Loonie front, crude oil markets have extended their rally amid renewed optimism regarding an increase in fuel demand during the summer. It is important to consider that the Canadian Dollar (CAD) may be supported by higher energy prices, as Canada is the primary exporter of petroleum oil to the United States.
Additionally, the Bank of Canada (BoC) reduced its policy rate from 5% to 4.75% on June 5, marking the first reduction in four years. The BoC Summary of Deliberations on Wednesday acknowledged the risks of prematurely terminating the project in contrast to the hazards of delaying it. Tiff Macklem, the Governor of the Bank of Canada, stated that it is "reasonable" to anticipate additional rate reductions; however, the rate of decline is expected to be gradual.
Bonus rebate to help investors grow in the trading world!
