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Canadian dollar strengthens as Fed hike odds fade for July

CME FedWatch showed at least a 25 bps July hike probability easing to 24.6% from 31% in the prior session.

Reported · Written up by our desk · Major Pairs

The Canadian dollar firmed against the US dollar in early European trade, with USD/CAD losing momentum to around 1.4145. FXStreet attributed the move to receding expectations that the US Federal Reserve will deliver a rate hike, weighing on the greenback.

Minutes from the Fed’s June 16 to 17 meeting, the first under new chairman Kevin Warsh, showed policymakers debating inflation risks, according to the report. While some participants saw a case for hiking rates, the overall shift in expectations has pressured the USD.

CME FedWatch data cited by FXStreet indicated that the probability of at least a 25 basis point hike at the July meeting eased to 24.6% from 31% the session before. For September, markets were pricing a 62.3% probability of a hike, down from 66.6% on Wednesday but above 54.1% a week earlier.

The article also linked CAD performance to oil and broader macro drivers, noting that Canada is a major oil exporter and that elevated crude prices can generally support the Canadian dollar. It added that crude remains elevated amid concerns around the Strait of Hormuz and cited news of explosions in southern Iran, after earlier US strikes and Iranian missile fire at a US base in Jordan.

Latest closeWTI crude $71.84 ▼2.3%

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