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16/09/24
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USD/CAD Dip Amid Fed Rate Cut Speculation and Consumer Sentiment Shifts
The USD/CAD currency pair has seen a slight dip, trading around 1.3575 in Monday’s Asian session. This movement is largely influenced by the increasing speculation surrounding potential rate cuts by the Federal Reserve, which has put downward pressure on the US Dollar. With the Fed’s interest rate decision scheduled for Wednesday, market participants are keenly observing how the central bank plans to adjust its rate strategy.
There is growing chatter regarding the possibility of a substantial half-point rate cut during the upcoming Federal Open Market Committee meeting, as policymakers aim to ensure economic stability. Such expectations have led to a palpable shift in market sentiment, with the likelihood of deeper cuts now estimated at nearly 49%, a significant rise from just 28% the day before. This heightened anticipation is contributing to a softer USD.
In other developments, data released by the University of Michigan revealed an increase in the Consumer Sentiment Index, which climbed to 69.0 in September, up from 67.9 previously. This figure surpassed market expectations, suggesting an improving outlook among consumers that may play a role in economic discussions moving forward.
On the Canadian side of the equation, Bank of Canada Governor Tiff Macklem indicated a readiness to potentially accelerate interest rate cuts if economic performance falls short of expectations. Should such actions occur, it could lead to a weakening of the Canadian Dollar against its US counterpart. However, the impact of lower crude oil prices, given Canada’s status as a major oil exporter to the United States, may provide some support for the Loonie, limiting further declines.
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