USD/CAD treads water toward 1.3600, Fed Chair Powell’s speech eyed
- USD/CAD consolidates below the 1.3600 psychological level.
- Investors await Fed Chair Powell’s speech, seeking further cues on the inflation outlook.
- China’s economic situation drives Oil prices lower, influencing the Loonie pair.
USD/CAD extends gains for the second consecutive day, trading around 1.3590 during the European session on Friday. The US Dollar (USD) strengthened due to the solid United States (US) employment data, which reinforces the concerns over the inflation outlook. For the week ending on August 18, the index dropped to 230K from the previous reading of 240K, which was expected to remain consistent.
The US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against six major currencies, hovers around 104.20. Market participants await the US Federal Reserve (Fed) Chair Jerome Powell’s speech at the Jackson Hole Symposium, seeking insights into the financial and economic outlook, helping to shape potential strategies in response to placing bets on the USD/CAD pair.
Furthermore, the former President of the St. Louis Federal Reserve James Bullard, expressed hawkish sentiments that provided support to the US Dollar (USD). Bullard stated, as reported by Bloomberg, that “The reacceleration could put upward pressure on inflation and thus makes it impossible for the Fed to start cutting rates anytime soon.” Conversely, Patrick Harker, President of the Federal Reserve Bank of Philadelphia, suggested the possibility of concluding the rate hike trajectory, while the President of the Boston Federal Reserve advocated for maintaining a bias to keep rates elevated for an extended period.
Investors remain positive on the Fed’s hawkish stance, leading to an increase in US Treasury yields and providing support to the Greenback. China’s economic challenges are driving down the Oil prices, which in turn is having a negative impact on the Canadian Dollar (CAD), given Canada is one of the Crude oil exporters.