- USD/CAD is trading in a tight range near 1.3450 as Bank of Canada policy enters the picture.
- Rising oil prices capped gains in the loany asset, while losses were supported by a stronger US Dollar.
- The BOC is expected to hold interest rates steady at 4.5% as Canadian inflation continues to decline.
Pair usd/cad It moves around 1.3430 in the opening bar of the New York session. The loonie asset is struggling to make a decisive move as investors turn their attention to the Bank of Canada (BoC) interest rate decision due to be announced on Wednesday.
S&P 500 futures show nominal gains ahead of the open of the US session. The overall market sentiment is very bullish as the federal government has been successful in eliminating default from the US economy.
Dollar Index (DXY) has registered a new high of the day at 104.40 points. Investors are upbeat on the dollar index, as a steady increase in new payrolls in the US labor market is supporting expectations of a continuation of the tightening policy by the Federal Reserve (Fed).
It should be noted that the loonie is rising despite the strength of the USD index, indicating that the Canadian dollar is also strengthening.
The trigger supporting the Canadian dollar is a rise in oil prices after Saudi Arabia announced a cut in oil production. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said on Sunday: “Saudi Arabia will make an additional production cut of 1 million barrels a day from July,” further adding that the Kingdom will extend its voluntary production cuts. 500,000 barrels per day (b/d) by the end of 2024.
Investors should note that Canada is the largest exporter of oil to the United States and rising oil prices are supporting the loonie.
The interest rate policy of the BoC will be closely watched this week. BoC Governor Tiff McCallum is expected to hold interest rates at 4.5% as Canadian inflation continues to decline. In April, Canada’s inflation stood at 4.4%.
(tags to translate) usdcad