CAD Shrugs Off Economic Growth as USD Stages Comeback

The Canadian Dollar showed little reaction to Canada's second consecutive month of economic growth, as announced by Statistics Canada. The economy expanded by 0.3% in May, matching expectations.

However, this positive impact on the Loonie was short-lived. The US Dollar regained momentum, driven by ongoing concerns over inflation and the potential for a 25-basis-point interest rate hike by the Federal Reserve (Fed) in September.

Fed Chair Kevin Warsh emphasized the central bank's commitment to restoring price stability. Markets currently assign around a 65% chance to a 25-basis-point Fed rate hike at the September meeting, according to the CME FedWatch tool.