The USD/CAD currency pair retreated from its all-time high of 1.3958, recorded in the previous session, and traded around 1.3900 during Thursday’s Asian trading hours. Despite this pullback, the downside for the pair may be limited as the US Dollar (USD) could gain support from expectations surrounding a potential Republican victory in the US elections.
The US Dollar Index (DXY), which tracks the USD against six major currencies, also experienced a retreat from its four-month high of 105.44 on Wednesday. The DXY hovered around 105.00, following a correction in US Treasury yields, which had surged to their highest levels since July—4.31% and 4.47%, respectively.
Markets are now turning their attention to the US Federal Reserve’s policy decision, with expectations of a modest 25 basis point rate cut in November. According to the CME FedWatch Tool, there is a 98.1% probability of such a move.
Meanwhile, the Canadian Dollar (CAD), which is closely linked to commodity prices, may have found some support from rising oil prices. As Canada is the largest oil exporter to the US, the price of West Texas Intermediate (WTI) crude surged toward $72.00 during Thursday’s trading session.
In Canada, a summary of recent discussions at the Bank of Canada (BoC) revealed concerns among some officials that aggressive rate cuts could signal fears of a deeper economic downturn. However, BoC officials emphasized that future rate decisions would be data-dependent, and markets should not expect half-point cuts at every meeting.
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