The pair gains as Fed dissenters push for a 25 basis point hike, while upcoming US Q2 GDP data may influence further moves.
The USD/CAD pair climbed above 1.4050 in early European trading Thursday, driven by hawkish signals from the US Federal Reserve. Three regional Fed presidents dissented in favor of a 25 basis point rate hike at Wednesday’s meeting, reinforcing expectations of tighter policy if inflation persists.
The Fed held rates steady at 3.50%-3.75%, aligning with market forecasts. Chair Kevin Warsh indicated the committee would act swiftly if inflation pressures reaccelerate. Later Thursday, the preliminary US Q2 GDP reading could sway sentiment, with traders assessing growth against inflation risks.
Technical indicators suggest a bullish bias, with the pair holding above its 100-day SMA. However, potential Middle East tensions may support the CAD, given Canada’s reliance on oil exports.