The USD/CAD pair faces downward pressure on Thursday as the US Dollar (USD) experiences modest weakness. Contributing to this decline is the Bank of Canada’s (BoC) decision to maintain its hawkish stance, which bolsters the Canadian Dollar (CAD).
Despite some recovery in US bond yields and a slight improvement in risk sentiment, the USD struggles to gain traction. Fed Chair Jerome Powell’s remarks about potential rate cuts this year and mixed signals on Fed policy add to the USD’s woes. While Powell expressed the likelihood of rate cuts, other Fed officials like Neel Kashkari suggest a more cautious approach.
Meanwhile, the CAD benefits from the BoC’s decision to hold its hawkish stance, while subdued crude oil prices have minimal impact on the commodity-linked currency.
Investors await Powell’s testimony before the Senate Banking Committee and monitor economic indicators like US Weekly Initial Jobless Claims and Trade Balance figures from both the US and Canada. These factors, US bond yields, and overall risk sentiment will influence USD demand and impact the USD/CAD pair’s movement.
