Usdcad Trades Green

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Usdcad Trades Green

Usd/Cad Trades Above 1.3650, Us Ppi Eyed

The USD/CAD pair is seen trading above the 1.3650 handle during Tuesday's session. Overall, the economic calendar remains light in the context of the Canadian economic data.

However, the US side has the PPI and the CPI data which is the reason why the USD/CAD traders are now waiting for the results.

Inflation Remains High In Usa

lot of Fed officials have already talked about the need to maintain higher rates for a long time. According to them, that's the only way to bring down the inflation in the country.

However, the Fed chair made it clear that it doesn't mean that a rate hike is on the cards, as he called it highly unlikely. But it is also important to note that he didn't fully rule it out.

Powell also talked about how the central bank needs greater confidence before it can go ahead with the rate cuts. After all, the need to achieve a 2% inflation target is more important than the urgency to cut rates.

Fed president 'Logan' from Dallas commented on how inflation carries upside risks. That's why she believes that it is still too soon to even talk about rate cuts at this point.

The overall narrative for the interest rate in the USA is that it will remain high for long. As a result, the greenback remains supported even after short periods of selling.

So, it is safe to say that the USD/CAD is tailwind by the fear of higher rates in the USA. While this may bode well for the USD, we can't say the same about the CAD.

Meanwhile, a decline is seen in the crude prices, which continue to put pressure on the CAD as Canada is one of the top oil exporters. However, the employment data from Canada might prove to be the catalyst needed by the BoC to delay the rate cuts and continue with the current rates.

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