- USD/CAD rises to 1.3660 in a climate of caution awaiting the FOMC Minutes.
- Fed officials insist on keeping interest rates tight for longer.
- Trade raises bets in support of an early rate cut by the BoC.
The USD/CAD pair rises towards 1.3660 amid caution ahead of the Federal Open Market Committee (FOMC) Minutes, due to be released later in the day.
The FOMC Minutes will provide more clues on whether policymakers are comfortable with market expectations that the Federal Reserve (Fed) will shift to policy normalization starting with the September meeting.
Ahead of the FOMC Minutes, market sentiment is slightly nervous. The S&P 500 has opened cautiously. The US Dollar Index (DXY), which tracks the dollar against six major currencies, rose to 104.80. The 10-year US Treasury yield rises to 4.43%, as Fed officials continue to stress the need to keep interest rates at their current levels for longer.
Despite the expected decline in US Consumer Price Index (CPI) data for April, Fed officials support the continuation of a restrictive stance on interest rates, as a one-off decline in pressures on prices is insufficient to generate confidence that progress in the disinflation process has resumed.
Meanwhile, the Canadian dollar is expected to face significant pressure as speculation that the Bank of Canada (BoC) will begin cutting interest rates from its June meeting has strengthened following the soft report. April inflation. Statistics Canada reported Tuesday that the BoC's preferred measure of inflation grew at a slower pace of 1.6% from the previous reading of 2% on a year-over-year basis. The annual headline CPI slowed to 2.7%, as expected, from the previous reading of 2.9%.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
