USD/CAD remains stronger for the second successive day, hovering around 1.4230 during the European session on Tuesday.
The currency pair steadies as the US Dollar (USD) strengthens on growing expectations of a hawkish Federal Reserve interest rate path
According to the CME FedWatch tool, traders are now pricing in above 60% probability of a Fed interest rate hike by September. Traders are looking ahead to Wednesday’s US ADP employment data and Thursday’s Nonfarm Payrolls (NFP) report for clues on the Federal Reserve’s next policy moves. A stronger-than-expected jobs report could reinforce the Fed’s “higher-for-longer” interest rate stance, potentially dampening appetite for risk-sensitive assets.
The USD/CAD pair remains resilient, as a decline in safe-haven demand for the US Dollar is offset by a weaker Canadian Dollar (CAD). The commodity-linked Loonie dollar faces downward pressure from lower crude oil prices as market participants weigh in on potential US-Iran peace talks in Doha under a fragile interim ceasefire. However, while US-Iran diplomatic signals remain highly conflicted, with US President Donald Trump announcing that the two nations were set to hold fresh peace talks on Tuesday, Tehran contradicted this claim, stating that no negotiation meetings are scheduled with Washington.