The USDCAD exchange rate has economic data ahead this week.
USDCAD – Daily Chart
The USDCAD exchange rate has been trading in a price range and could head for the 1.33 level.
Canada’s inflation rate is expected to dip to 2.8% from 2.9% on Tuesday. Due to its softer inflation figures, the US dollar has weakened against various currencies.
Investors are now looking ahead to the Federal Reserve’s first rate cut, expected in September.
The Bank of Canada is also pressured to cut interest rates due to a weak economy.
Business insolvencies have increased 87 percent over the past year to the highest level since the global financial crisis struck in 2008. Unemployment has also surged 20 percent year over year.
There has also been a slowdown in the previously frothy property market. Home sales in the once-hot Greater Toronto Area have cooled 3.4 percent month over month in April, losing ground in the past three months and down five per cent from year-ago levels. At the same time, new listings have jumped 47 percent yearly, and this new demand-supply backdrop has created the conditions for a flattening out in residential prices.
In the US, Federal Reserve Governor Michelle Bowman once again said she is open to raising interest rates, citing rising inflation risks.
“While the current stance of monetary policy appears to be at a restrictive level, I remain willing to raise the target range for the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or reversed,” Bowman said.
Like other Fed officials, Bowman said the central bank will need to assess more data, highlighting a decline in inflation, before adjusting interest rates from their current 23-year high.
The Canadian dollar has been softer due to a slowing economy. However, now traders are moving to sell the US dollar as lower interest rates are expected.
