18 Nov 2024

USD/CAD is struggling to maintain its winning streak for the seventh consecutive session on Monday. The strength of the US Dollar is supported by recent hawkish comments from officials at the Federal Reserve. Meanwhile, the commodity-linked Canadian Dollar may find support from favorable sentiment regarding Oil prices, amid rising concerns over potential supply disruptions.

During the Asian trading hours on Monday, USD/CAD is trading around 1.4090, remaining close to the four-year high of 1.4105 reached on Friday. The upward movement of the loonie pair is primarily due to the robust performance of the US Dollar, which has been influenced by the recent hawkish statements from Federal Reserve officials.

Federal Reserve Chair Jerome Powell has downplayed the chances of imminent rate cuts, emphasizing the resilience of the economy, a strong labor market, and ongoing inflationary pressures. He stated, "The economy is not sending any signals that we need to be in a hurry to lower rates."

Additionally, on Friday, Austan Goolsbee, President of the Federal Reserve Bank of Chicago, highlighted the necessity for the Fed to adopt a cautious and gradual approach towards achieving the neutral rate. In contrast, Boston Fed President Susan Collins moderated expectations for further rate cuts in the near future while still maintaining market confidence in a possible reduction in December.

The USD/CAD pair may see a halt to its six-day winning streak as the commodity-linked Canadian Dollar could gain strength, supported by positive sentiment surrounding Oil prices. This optimism is fueled by increasing concerns over potential supply disruptions due to escalating tensions between Russia and Ukraine.

Nevertheless, the Canadian Dollar is under pressure due to expectations that the Bank of Canada will expedite interest rate cuts in response to declining inflation and a weakening economy. Traders are likely to pay close attention to Tuesday's Canadian CPI inflation report for new insights into the central bank's policy trajectory.