Thu, Jul 29, 2021 @ 11:04 GMT
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Canadian Dollar Edges Higher as Wholesales Sales Sparkle

USD/CAD has edged higher in the Monday session. In North American trade, the pair is trading at 1.3360. On the release front, Canadian Wholesale Sales jumped 3.3%, crushing the estimate of 0.3%. In the US, there are no economic events on the schedule. President Trump will speak at an event in Louisville, Kentucky. As well, FOMC member Charles Evans will deliver a speech in New York City. On Tuesday, Canada releases retail sales reports.

The Federal Reserve raised rates by a quarter-point last week, but the US dollar responded with broad losses. The Canadian dollar took advantage, gaining 1 percent last week. Why the negative reaction from the greenback? Firstly, there was disappointment in the markets with the Fed policy statement, which was more dovish than expected. The rate move was priced in at over 90 percent, and there had been speculation that a red-hot US economy would propel the Fed to accelerate its pace of monetary tightening, with possibly four rate hikes this year. Instead, Fed Chair Janet Yellen reiterated that further rate hikes would be "gradual" and the Fed made no changes to its "dot plot", with a projection for three rate hikes in 2017. As well, the US dollar may have lost ground due to traders and investors acting on "buy on rumor, sell on fact".

What’s next for Janet Yellen & Co? Analysts do not expect another rate move in May, while a hike in June is currently priced in at 50%. The markets will be looking for clues about the Fed’s monetary plans. A host of FOMC members will be speaking this weak, highlighted by Janet Yellen’s speech on Thursday at an event in Washington. The market will be looking for clues regarding monetary policy. In the past, Fed policymakers have presented conflicting positions, and if the market senses divisions within the Fed, the US dollar could lose ground.

MarketPulse is a forex, commodities, and global indices research, analysis, and news site providing timely and accurate information on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

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