The USDCAD exchange rate has data ahead with a BoC interest rate decision and Fed Chair Jerome Powell’s testimony.
USDCAD – Daily Chart
USDCAD trades at the 1.3572 level after climbing for around 10 trading sessions. The pair could see a push to the stubborn 1.3900 level or retrace back toward support at 1.3200.
The US will release its anticipated Services PMI data ahead of the Hong Kong session on Wednesday. The headline events will follow that evening, with the BoC first.
In two days of testimony to lawmakers, Powell is expected to double down on his message that the central bank is in no hurry to cut interest rates, especially after recent inflation data which showed stubborn price pressures.
Powell’s semi-annual monetary policy testimony will likely see politicians putting pressure on the Fed Chair to cut rates due to economic pressures.
The “danger of moving too soon is that the job’s not quite done, and that the excellent readings we’ve had for the last six months somehow turn out not to be a true indicator of where inflation’s heading,” Powell said in an interview last month. Market bets for earlier rate cuts were unwound with the cautious tone, but inflation was higher last month.
For the Bank of Canada, ING analysts see a “holding pattern” in place until the summer.
“We only expect rate cuts to start in June, and take the policy rate 100bp lower by year-end,” they said.
“While there is little prospect of any rate cut at the 6 March meeting and we doubt the BoC will be comfortable enough to loosen policy at the following meeting on 10 April, we do expect interest rate cuts to start coming through from the 5 June meeting onwards”.
Any change to summer rate cuts for the Canadian dollar or US dollar could rock the pair out of its recent range pattern.
