The Canadian Dollar gains against the USD despite Fed signals of potential rate hikes by year-end amid cooling oil prices.
The USD/CAD pair retreated to 1.4230 in Asian trading, ending a winning streak as the US Dollar weakened despite growing expectations of Federal Reserve rate hikes. Markets now price an 83.1% chance of a December hike, driven by Fed Chair signals prioritizing inflation control over economic stability.
Traders are eyeing upcoming US PCE data, with headline inflation forecast to rise to 4.1% YoY in May from 3.8% in April. Core PCE is also expected to increase to 3.4% YoY. The Canadian Dollar faces pressure from declining crude prices, as easing US-Iran tensions boost global oil supply.
Canada, the largest crude exporter to the US, sees its commodity-linked currency struggle amid lower oil prices. Improved shipping confidence in the Strait of Hormuz has further eased supply concerns, weighing on energy markets.