- USD/CAD holds losses as the US Dollar faces challenges amid rising odds of further Fed rate cuts.
- US Treasury Secretary Scott Bessent expects a 50-basis-point rate cut by the Fed in September.
- The commodity-linked CAD rises as Oil prices rise on a risk premium ahead of the Trump-Putin meeting.
USD/CAD remains subdued for the third successive day, trading around 1.3760 during the Asian hours on Thursday. The pair struggles as the US Dollar (USD) loses ground amid rising odds of further rate cuts by the US Federal Reserve (Fed). CME’s FedWatch tool indicates that Fed funds futures traders are now pricing in nearly a 94% chance of a 25 basis point (bps) interest rate cut at the September meeting.
US Treasury Secretary Scott Bessent said in an interview on Wednesday that short-term Fed interest rates should be 1.5-1.75% lower than the current benchmark rate at an effective 4.33%. Bessent added that there is a good chance that the central bank could opt for a 50 basis point rate cut in September.
US President Donald Trump shared his “paper calculation” that Fed interest rates should be at or near 1%. Trump also noted interest rates should be three or four points lower. Interest rates are just a paper calculation, he added.
The USD/CAD pair also faces challenges as the commodity-linked Canadian Dollar (CAD) receives support from the stable crude Oil prices. It is important to note that Canada is the largest Oil exporter to the United States (US).
West Texas Intermediate (WTI) Oil price extends its recovery after touching a two-month low at $61.35, trading around $62.20 at the time of writing. Crude Oil prices rise on a risk premium ahead of talks between US President Donald Trump and Russian President Vladimir Putin. Trump warned of “very severe consequences” for Russia if Putin refuses to end the Ukraine war.
