USD/CAD Gains as Fed Rate Cut Expectations Persist

The US Dollar (USD) strengthened against the Canadian Dollar (CAD) on Thursday, with USD/CAD trading near 1.3755. The market is increasingly betting that the Federal Reserve (Fed) will implement a series of modest interest rate cuts in the coming months.

The Fed’s dovish stance, coupled with geopolitical tensions and US election uncertainty, is supporting the USD. Meanwhile, the Canadian Dollar (CAD) is under pressure due to falling oil prices and expectations of a more aggressive rate cut by the Bank of Canada (BoC).

Fed Rate Cut Expectations: Markets are pricing in a high probability of a 25 basis point Fed rate cut in November.
Geopolitical Factors: Middle East tensions and US election uncertainty are bolstering the USD.
Falling Oil Prices: Lower oil prices are weighing on the CAD as Canada is a major oil exporter.
BoC Rate Cut: The BoC is expected to cut rates by 50 basis points at its next meeting.
Overall, the USD is gaining strength against the CAD as investors anticipate a more accommodative monetary policy from the Fed. However, the CAD may face additional downward pressure due to falling oil prices and the BoC’s expected rate cut.