USD\/CAD<\/strong><\/a> has fallen more than 2.0% over the past two weeks, with the pair now trading near C$1.3350 and steadily approaching its 2023 lows.<\/p>\nBank of Canada\u2019s surprising decision to raise interest rates at its June meeting after pausing its hiking campaign in January has reinforced recent FX dynamics, acting as another positive driver for the Loonie.<\/p>\n
BoC\u2019s aggressive stance could continue to put downward pressure on USD\/CAD in the near term, especially if traders boost bets on further tightening in response to the central bank\u2019s view that \u201cmonetary policy is not sufficiently restrictive\u201d to bring inflation down to the 2.0% target.<\/p>\n
The benign outlook for the Canadian dollar, however, hinges on one key factor: the Fed must stick to the script and hold borrowing costs steady next week, in line with Powell\u2019s guidance. If the bank deviates from its telegraphed move, interest rate expectations could quickly shift in a more hawkish direction, sparking a rally in the U.S. dollar.<\/p>\n
Although the FOMC does not like to surprise markets, economic circumstances may force policymakers to err on the side of tightening. One possible incoming report that could tip the scales in favor of additional hikes is the May consumer price index survey, which will be released Tuesday.<\/p>\n
According to consensus estimates, annual headline CPI fell to 4.1% from 4.9%, and the core gauge eased to 5.3% from 5.5% last month. If inflation results beat these forecasts by a wide margin and show stickiness, the Fed could come out swinging, delivering another 25 basis point hike and projecting a higher peak rate. This would be a bullish outcome for USD\/CAD.<\/p>\n","protected":false},"excerpt":{"rendered":"
USD\/CAD at Risk on Hawkish BoC but Fed May Be a Spoiler The Canadian dollar has appreciated sharply against the U.S. dollar since late May. The chart below shows how USD\/CAD has fallen more than 2.0% over the past two weeks, with the pair now trading near C$1.3350 and steadily approaching its 2023 lows. Bank<\/p>\n... continue reading<\/a>.","protected":false},"author":3,"featured_media":20762,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[12],"tags":[94,265,266,168,19,24,22,355,201],"yoast_head":"\r\nUSD\/CAD at Risk on Hawkish BoC but Fed May Be a Spoiler<\/title>\r\n<meta name=\"description\" content=\"The chart below shows how USD\/CAD has fallen more than 2.0% over the past two weeks, with the pair now trading near C$1.3350 and steadily approaching its 2023 lows.\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.xtrememarkets.com\/US\/usd-cad-at-risk-on-hawkish-boc-but-fed-may-be-a-spoiler\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"USD\/CAD at Risk on Hawkish BoC but Fed May Be a Spoiler\" \/>\r\n<meta property=\"og:description\" content=\"The chart below shows how USD\/CAD has fallen more 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