- USD/CAD loses traction above the 1.3700 mark on Monday.
- Traders believe the Fed is done with the hiking cycle and expect the Fed will begin easing monetary policy in May 2024.
- FOMC Meeting Minutes and Canadian CPI will be closely watched events.
The USD/CAD pair trades in negative territory for the second consecutive day in the Asian session on Monday. The downtick of the pair is backed by the weaker US Dollar (USD) and the lower US Treasury bond yield. At the time of writing, USD/CAD is holding lower ground near 1.3705, losing 0.07% on the day.
The Federal Reserve (Fed) officials maintained their messages on the monetary policy outlook last week. Boston Federal Reserve (Fed) President Susan Collins said the Fed would bring down inflation without causing significant harm to the labor market while being patient with the next interest rate moves. Meanwhile, Fed President Austan Goolsbee said that inflation is on track to achieve the Fed’s target as long as house price pressures decrease. Market players place their bet that the Fed is done with the hiking cycle and expected Fed will begin easing monetary policy in May 2024.
The Bank of Canada (BoC) stated earlier this month that the era of historically low-interest rates was likely coming to an end and cautioned households and businesses to anticipate higher borrowing costs than in recent years. Meanwhile, a rebound in oil prices might lift the commodity-linked Loonie as the country is the leading oil exporter to the US.
Traders will monitor the Federal Open Market Committee (FOMC) Meeting Minutes and the Canadian Consumer Price Index (CPI) for October on Tuesday. The US Durable Goods Orders for October and the Michigan Consumer Sentiment Index for November will be due on Wednesday. Also, S&P Global PMI data will be released on Friday. Traders will take cue from these figures and find trading opportunities around the USD/CAD pair.