On Wednesday, the USD/CAD pair hits its highest point in two years, but it did experience some easing as it went down from 1.3400. The pair is trading between 1.3375 and 1.3380 at the start of the European session, keeping its gains from earlier in the day.
The US dollar is getting a boost from the Federal Reserve’s hawkish views for the second day in a row.
This helps the USD/CAD pair. After a two-day meeting, the US central bank will likely raise rates by 75 bps on Wednesday. The markets have a slight chance of an entire 100-bps rate hike, which keeps the dollar as a haven along with the cautious attitude.
Concerns about a global recession that is getting worse have made the market less optimistic. A slight drop in the yields on US Treasury bonds keeps USD bulls from making big bets. A big rise in the price of crude oil during the day also slows gains in the USD/CAD. Investors are still hesitant and would rather wait until the FOMC policy statement is released later in the US session.
The dot plot and updated economic estimates will help investors decide what to do. Fed Chair Jerome Powell’s comments show signs that rates will go up after a meeting. This will make people want USD in the short term.
Conclusion
The way the price of oil changes should help shape the next move of the USD/CAD. Spot prices might stay the same before a big event.