The USD/CAD pair continues its upward trajectory for the second consecutive day, trading around 1.3850 during the Asian session on Friday. This level is close to its two-month high of 1.3868, reached on Thursday. The strength of the pair is largely attributed to the robust performance of the US Dollar (USD), fueled by rising expectations that the Federal Reserve will adopt a less aggressive stance on interest rate cuts than previously anticipated.
Additionally, the Greenback is supported by growing speculation regarding a possible second term for former President Donald Trump in the upcoming US presidential election in November. This speculation is particularly influenced by Trump’s inflationary policies, which include higher tariffs and lower taxes.
During a campaign event in Las Vegas on Thursday, Trump reiterated his vision for the economy, stating, “Under the Trump administration, we’re going to build an economy that lifts up all Americans, including African Americans, Hispanic Americans, and also members of our great Asian American and Pacific Islander community, many of whom are here today,” as reported by Reuters.
On the other hand, Vice President Kamala Harris garnered support from high-profile figures such as rock legend Bruce Springsteen, entertainer Tyler Perry, and former President Barack Obama at a rally in Georgia, which attracted thousands of attendees in this pivotal battleground state.
Meanwhile, the commodity-linked Canadian Dollar (CAD) is likely to face continued pressure due to falling crude oil prices, as Canada is the largest oil exporter to the United States. West Texas Intermediate (WTI) oil is currently experiencing its third consecutive day of losses, trading around $70.20 per barrel.
Market participants are also expected to focus on Canada’s upcoming Retail Sales data, set to be released later in the North American session. In addition, Bank of Canada (BoC) Governor Tiff Macklem is scheduled to address journalists, both in-person and virtually, during the IMF meeting, which could provide further insights into the BoC’s monetary policy outlook.
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