USD/CAD rallies sharply on BoC’s Macklem hawkish remarks

The USD/CAD pair climbs above 1.3700 as traders eye a break of 1.3800 as they focus on Friday’s NFPs. The Bank of Canada’s Governor Macklem said, “further interest rate increases are warranted,” reiterating the BoC’s hawkish stance.

The USD/CAD climbs sharply during the US session, as Fed officials remained focused on bringing inflation down, disregarding a possible US recession, while markets’ expectations for a Fed pivot dwindled, as shown by US equities, registering losses. Therefore, the USD/CAD is trading at 1.3722, above its opening price by 0.81%.

Tiff Macklem expressed in prepared remarks that while Canada’s economy begins to slow, the labor market remains tight, while demand is still eclipsing supply. Macklem commented that the bank needs clear evidence that inflation is coming down.