USD/CAD firmer ahead of speeches by Fed’s Powell, BoC’s Macklem

The USD/CAD pair is holding to gains as traders await clues by Fed Chair Jerome Powell’s speech later on Tuesday. At the time of writing, the pair is trading at 1.3463, registering 0.12% gains versus the previous closing at 1.3445.

On Tuesday, the US trade deficit widened, though market participants ignored it. Bank of Canada’s Governor Tiff Macklem will deliver an awaited speech as well. In the meantime; the USD/CAD prolongs its gains to four straight days, though it is seen below the weekly high of 1.3475, hovering around 1.3460, after hitting a the 1.3401 daily low.

Wall Street opened in the red territory, with the exception of the Nasdaq 100. Traders are awaiting Powell’s speech at the Washington Economic Club. Investors are looking for Powell’s pushback following last Friday’s strong US jobs report indicating that the US economy added 517K jobs versus expectations of below 200K. Consequently, the Unemployment Rate dived to 3.4% from 3.5%, which would warrant further tightening by the Fed.


On the data front, the US Commerce Department revealed the trade deficit widened10.5% to $-67.4B compared to November’s $-61B, but below the market’s expectations of $-68.5B. The US Dollar Index continues to print gains, up 0.28% at 103.910, a tailwind for the USD/CAD pair. Crude oil prices are reinforced following Turkey and Syria’s earthquake, which disrupted one of Turkey’s ports that exported around 1% of global supplies in January. WTI exchanges hands at $75.47, up 1.44%, capping the USD/CAD rally.

Statistics Canada revealed its trade balance narrowed, compared to December’s data, as lower crude oil prices weighed on energy export and imports of consumer goods fell. USD/CAD traders could get some cues from BoC Governor Tiff Macklem’s speech at 17:30 GMT. Given that the BoC announced a pause after lifting rates to 4.50%, it could weigh on the Canadian dollar. Therefore, any dovish hints could pave the way for further upside in the USD/CAD, though capped by oil prices.