- USD/CAD does not have a stable direction today and is affected by many different forces.
- The Canadian dollar was supported by an overnight rise in oil prices and fading bets on a sharp rate cut by the Bank of Canada.
- The dollar remains steady ahead of Federal Reserve Chairman Jerome Powell’s speech later today.
The USD/CAD pair struggled to capitalize on the gains of the past two days and peaked around the 1.4070 region during the Asian session on Wednesday. Stocks are near their highest levels of the week, but the underlying mechanisms warrant some caution before making fresh bullish predictions.
Crude oil prices rose on Thursday, taking advantage of the previous meeting of OPEC+ to announce further production cuts. The dark liquid was also supported by Israel’s threat to attack Lebanon if its conflict with Hezbollah ends. This, combined with the easing of bets on a December rate cut by the Bank of Canada, could support Canadian dollar-pegged stocks and could track a breakout in USD/CAD.
Meanwhile, the U.S. dollar has struggled to gain ground as investors are reluctant to place bets ahead of Fed Chair Jerome Powell’s speech, which could limit further gains for USD/CAD. But the Fed should be cautious about cutting rates amid concerns that Trump’s easing will lead to inflation, which should be the driving force behind the dollar.
Investors will also be looking ahead to Friday’s U.S. nonfarm payrolls (NFP) data, which will provide further guidance on the path of the Fed’s rate cuts and the impact on the housing market near the U.S. labor market, suggesting that any significant USD/CAD declines could be viewed as overbought and limited.
