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USD/CAD trades above 1.4200 as Fed rate-timing debate weighs on the Loonie
The pair’s swings followed comments from New York Fed President Williams, who said there is no rush to hike, and Fed Governor Barr, who pointed to high energy prices and AI investment as reasons further hikes may be needed.
USD/CAD moved above 1.4200 for the first time since early July but then retraced during the session, a pattern driven by shifting expectations around US and Canadian rate timing. According to FXStreet, Tuesday’s Canadian catalysts included a flat July for the economy and a later start to Bank of Canada bond buying, neither of which pushed the currency pair materially.
The market’s moves accelerated after US central bank remarks. FXStreet reports that New York Fed President Williams said there is no rush to hike again, helping trigger one of the pair’s pullbacks, while the other dip began later as Governor Barr said high energy prices and artificial intelligence investment imply more hikes may be required.
FXStreet also tied the session’s trading to US data and additional Fed comments. Job openings fell to 7.079 million in August versus a 7.23 million forecast, and after Barr spoke in Detroit, USD/CAD made another run at the day’s high as Williams said one more hike may be appropriate late this year and that the September 16 move to 3.75% to 4.00% gives the Fed time to wait for data.
With both central banks scheduled to meet on October 28, FXStreet said the timing remains the key variable, noting that Fed funds futures still price about a 70.0% chance of an October hike.
The source text ends mid-sentence, but it indicates the focus is on how differing hike timing views could keep pressure on USD/CAD.