The USD/CAD pair has seen a pullback after a strong rally at the beginning of April. This rally was largely driven by US Dollar strength due to positive US inflation and jobs data, as well as hawkish comments from Federal Reserve Chairman Jerome Powell. Powell’s recent speech indicated a delay in potential interest rate cuts, leading to a stronger US Dollar.
On the other hand, the Canadian Dollar has weakened as expectations grow for a potential interest rate cut by the Bank of Canada in June. Governor Tiff Macklem mentioned a downward trend in Canadian inflation, further supporting the possibility of rate cuts. Additionally, falling Oil prices have also contributed to the Canadian Dollar’s weakness, as Oil is a major export for Canada.
Currently, the USD/CAD pair is trading around 1.3750, showing a slight decrease from the strong rally earlier in April. With the US delaying rate cuts and the potential for cuts in Canada, the currency pair’s movements will continue to be influenced by monetary policy expectations in both countries.