USD/CAD edges higher on Wednesday, trading in the 1.3680s as the US Dollar (USD) firms up on commentary from several Federal Reserve (Fed) rate-setters, that overall suggests the US central bank is reluctant to cut its main interest rate, the Fed Funds rate, due to insufficient progress being made on lowering inflation.
USD/CAD rebounds on reluctance of Fed commentators to endorse near-term interest-rate cuts. The pair had been weakening after higher-than-expected inflation in Canada stopped the BoC from beginning its easing cycle. USD/CAD lacks directionality on the charts and has declined since making a false breakout higher in early June. USD/CAD edges higher on Wednesday, trading in the 1.
USD/CAD’s rebound comes after a period of weakness for the pair during which investors revised their expectations of the path of Bank of Canada monetary policy. From previously expecting the BoC to begin a cycle of interest rate cuts due to declining inflation in Canada they now see the BoC holding its policy rate at the current level – much like the Fed. The BoC cut their policy interest rate by 0.25% to 4.
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