The USD/CAD pair traded higher Wednesday morning as stronger US economic data and the Federal Reserve's cautious stance supported the US dollar. Canadian Prime Minister Justin Trudeau's announcement to resign further fueled the loonie's weakness.
USD/CAD trades with a mild positive bias around 1.4360 in Wednesday’s early Asian session. Stronger US economic data and the Fed's cautious stance underpin the US Dollar. Trudeau intended to step down from the leader of Canada’s ruling Liberal Party once a new party leader is chosen. The USD/CAD pair posts modest gains near 1.4360 during the early Asian session on Wednesday.
Investors digest the announcement that Canadian Prime Minister Justin Trudeau would resign and await fresh catalysts about the severity of expected US trade tariffs. Later on Wednesday, the Minutes of the Federal Open Market Committee (FOMC) will take center stage. The US economic data released on Tuesday showed a generally stable jobs market and a robust services sector. The reports might convince the US Federal Reserve (Fed) to slow the pace of its current rate-cutting cycle, which provides some support to the Greenback. Furthermore, the cautious stance of the Fed officials might contribute to the USD’s upside. On Tuesday, Atlanta Fed President Raphael Bostic said that the policymakers should be cautious with policy decisions given uneven progress on lowering inflation and err on the side of keeping interest rates elevated to achieve their price stability target. The markets have priced in nearly a 93.5% possibility that the Fed will hold rate steady this month, according to the CME FedWatch tool. Canadian Prime Minister Justin Trudeauannounced his resignation on Monday, saying he intended to step down from the leader of Canada’s ruling Liberal Party once a new party leader is chosen. A Canadian election may take place in the spring and must be held on October 20, with polls indicating that the opposition Conservatives will win. A change in leadership in Canada is not a long-term negative for the loonie, said Amo Sahota, executive director of Klarity FX in San Francisc
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