Canadian Dollar gains as US Dollar struggles despite rising Fed rate hike bets
USD/CAD extends its losses for the second successive day, trading around 1.3800 during the Asian hours on Tuesday. Analysts at HSBC caution that, despite the recent improvement in sentiment around the Fed’s anti-inflation stance, broader structural issues have not disappeared.
The Canadian Dollar (CAD) strengthened against the US Dollar (USD) on Tuesday as the USD faced pressure despite expectations of a Federal Reserve rate hike. Analysts cautioned that while the Fed's stance against inflation has improved, underlying issues remain, particularly concerning US fiscal sustainability. A robust US jobs report in August raised the odds of a September Fed rate hike above 60%, but investors are now looking ahead to upcoming inflation data.
The Canadian Dollar benefited from rising crude oil prices, which are near three-month highs due to Middle East tensions. Meanwhile, the US Dollar faced downward pressure as the Japanese Yen rallied. The Bank of Canada's interest rate decisions and Canada's economic performance, driven by its heavy reliance on oil exports, also played a crucial role in the CAD's performance.
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