USD/CAD softens to near 1.4205 in Wednesday’s Asian session. Iran’s Pezeshkian stated that there will be no negotiations regarding ballistic missiles. Traders are increasing their positions in anticipation of a US interest rate increase this year. The USD/CAD pair declines to approximately 1.4205 during the Asian trading hours on Wednesday. Nonetheless, the potential downside for the pair may be constrained in light of increasing expectations surrounding a Federal Reserve rate hike this year. The US May Personal Consumption Expenditures Price Index data will take center stage later on Thursday.
Iran’s President Masoud Pezeshkian stated on Tuesday that Tehran’s ballistic missile program will not be part of discussions with the United States, according to source. US President Donald Trump dismissed Iran’s assertion that no visit has been arranged for International Atomic Energy Agency inspectors, asserting that Tehran had previously consented to the arrangement. Uncertainty surrounding the US-Iran peace deal may bolster the US Dollar against the Canadian Dollar. Markets recalibrated their expectations for a more hawkish approach from the Fed, resulting in an appreciation of the Greenback. Traders are currently assigning an approximately 86.1% probability to a Federal Reserve rate hike in December, an increase from the 61% likelihood observed prior to last week’s FOMC meeting, as indicated by the CME FedWatch tool.
The Bank of Canada Governor Tiff Macklem stated on Tuesday that global imbalances in financial flows, driven by China’s export surplus and the United States’ dependence on foreign capital, may be contributing to financial stability risks. “The Loonie has been on the backfoot for several weeks with well-documented reasoning of widening yield differentials in favor of the USD, slowing growth, trade uncertainty or the uneasy status quo and a mostly asymmetric risk response to the Iran war,” stated Amo Sahota.