Warsh Speech and Canadian GDP Data Set to Influence USD/CAD
The Canadian Dollar (CAD) is holding steady ahead of two key events: Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole Symposium and the release of Canada's second-quarter Gross Domestic Product (GDP) figures.
Warsh's remarks are being closely watched for signals on US monetary policy, particularly regarding further interest rate hikes. The core Personal Consumption Expenditures (PCE) Price Index released on Wednesday came in line with market expectations, strengthening expectations of a September rate hike.
According to the CME FedWatch tool, markets now price in a 40% chance of a rate increase in September, up from 36% before the release. Several Federal Reserve officials have struck a hawkish tone ahead of Jackson Hole, with Kansas City Fed President Jeffrey Schmidt saying inflation remains 'sticky' and Cleveland Fed President Beth Hammack stating it's 'time to act.'
The Canadian Dollar could remain vulnerable amid renewed trade tensions with the United States, which has added 50% tariffs on certain US products. A significant surprise in the GDP figures could provide a fresh catalyst for USD/CAD.