The US dollar took a hit to begin the week on Monday after US President Trump issued a tweet that decried rising US interest rates amid his assessment that Russia and China are actively devaluing their respective currencies.
USD/CAD has continued to slide for much of the past three weeks as the US dollar has remained under sustained pressure while the Canadian dollar has benefited from, among other factors, provisional exemption from US President Trump’s imposition of import tariffs.
USD/CAD pulled back sharply from the key 1.3000 psychological level on Tuesday, ahead of Wednesday’s interest rate decision from the Bank of Canada and Friday’s employment reports from both the US and Canada.
Two primary catalysts for the return of sharply elevated market volatility emanated from the U.S. – Fed Chair Jerome Powell’s hawkish testimony in front of the US Congress, and US President Trump’s announcement regarding sizeable import tariffs on steel and aluminum.
As the US dollar remained elevated on Tuesday in the aftermath of Federal Reserve Chair Jerome Powell’s hawkish statements in front the US House Financial Services Committee, USD/CAD broke out to a new 2-month high, tentatively confirming a continuation of the uptrend that has been in place since early February.