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USD/CAD stays muted over 1.2900 as attention turns to Fed policies and oil prices rise
Concerns over the Fed's interest rate policies have caused USD/CAD to move sideways above 1.2900. While downturn signs have seriously sparked, price pressures have not reached their maximum level. Because of the unusually sharp contraction in the global economy, oil prices will continue to be fragile.
As a result of failing to maintain above the 1.2920 level, the USD/CAD pair is currently encountering barriers. The asset is under selling pressure and is anticipated to decline as investors turn their attention to the Federal Reserve's interest rate announcement (Fed). Broadly speaking, the asset has been trading in a band of 1.2855 to 1.2937 but rebounded quickly on Friday after holding the weekly support.
The Federal Reserve (Fed) will announce its monetary policy on Wednesday, therefore the US dollar index (DXY) is anticipated to stay muted. Since pricing pressures continue to harm US families, a rate rise announcement is about to come. However, the scope of the same will continue to be the key concern. The chances are in favor of the Fed raising interest rates for a second time by 75 basis points (bps).
The investment community has undoubtedly not discovered a significant indicator that may show that the price pressures have reached their limit, but the slowdown signs have increased as Friday's PMI stayed negative and big-name Wall Street profits are not alluring to investors.
After the release of Canada's Consumer Price Index, the loonie's vulnerability persisted (CPI). The total inflation came in at 8.1 percent, which was higher than the previous reading of 7.7 percent but less than predictions of 8.4 percent. Additionally, the core CPI increased by 10 basis points to 6.20 percent from 6.10 percent in the previous edition.
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