Usdcad Trades Above In Calm Market

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Usdcad Trades Above In Calm Market

Usd/Cad Trades Above 1.3750, Market Back To Normal

USD/CAD remains mostly flat near 1.3785 on Wednesday, with 1.3750 serving as the nearest support. The US Dollar has once again staged a rebound as the markets are back to normal after the rout.

Later today, the Canadian PMI data is due followed by the US crude oil inventories (EIA) data. Both of these will be closely watched as it can impact the CAD and thus the USD/CAD.

3.0% Rate Cut Expected From Federal Reserve

The recent rebound in the USD/CAD is a welcome development, given the sharp sell-off seen last week. Earlier, Chicago Fed Austan made it clear that investors shouldn't focus excessively on the recent market sell-off.

He added that the sell-off was due to the BoJ's rate decision and the increased geopolitical tension. It seems that he was right all along as the calm has returned back to the markets once again.

Now, the focus is on the Federal Reserve, as many believe that the central bank will do something to counter the weak employment numbers from July.

According to SMBC Nikko Securities, a rate cut worth 3.0% will be made by the US Federal Reserve by the 2025's end. If we take this into account, the path of least resistance for the USD/CAD will be the downside.

The forecast from SMBC Nikko Securities is a lot more aggressive than the outlook of the other players. Also, there's a 69.5% chance that the September meeting of the Federal Reserve will result in a 50 bps rate cut.

On Monday, the same odds were near 85%, which shows that many traders are now less sure about the prospects of a rate cut.

On the Canadian front, the employment data will be closely watched with a forecast of 22.5 jobs during July. The Canadian employment rate is also expected to turn higher to around 6.5%. The earlier reading of the jobless rate in Canada was 6.4% which means the job market is expected to turn soft in July.

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