Usdcad Recovers On Weak Sentiment

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Usdcad Recovers On Weak Sentiment

Usd/Cad Recovers Above 1.3450, Risk Sentiment Weakens Ahead Of Fed

USD/CAD has managed to recover some of the lost ground and is now trading around 1.3460. In the process, the pair has also ended its 3-day losing streak and is now trading in green for the day.

The upside in the USD/CAD is driven by the recovery of the US Dollar across the board. Now, the market participants are waiting for fresh cues from Fed Bostic and Fed Waller.

Nvidia Earnings Keep Traders On Edge

Later today, Nvidia's earnings results are also due, which has contributed to the cautious market mood. So, that's also a factor that benefits the US Dollar against the Canadian Dollar.

The market is now pricing in a 25 bps rate cut by the Federal Reserve. However, there is also a possibility of a deeper rate cut of around 50 bps. Overall, traders expect the total easing this year to be around 100 bps, which is equal to 1%.

Fed Daly has also talked about monetary policy and highlighted that the appropriate time for rate cuts is now! These comments are similar to the speech of Jerome Powell, and it seems that inflation is now on track to reach the 2% target.

On the Canadian front, experts believe that the BoC (Bank of Canada) will cut rates at its 4th September meeting. So, that's also something that weighs heavily on the Canadian Dollar.

It seems that the Federal Reserve's rate cut is already priced in, but the markets are now readjusting their expectations for the BoC rate cut.

Meanwhile, the crude prices have turned lower, which has also pushed the Canadian Dollar, which is closely linked to commodity prices.

Right now, one of the top oil exporters to the USA is Canada and any decline in oil prices also effects the CAD negatively. The overall sentiment is in favor of the US Dollar and against the Canadian Dollar, as evident from the recent price action.

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