The USD/CAD exchange rate has shown signs of recovery as investors adopt a cautious approach ahead of the upcoming interest rate decision from the Federal Reserve. During the early hours of trading on Wednesday, the pair was observed at around 1.3790, bouncing back from previously recorded losses. The US Dollar is strengthening amid market anticipation surrounding the Fed’s announcement, with most analysts expecting rates to remain unchanged. However, attention is particularly focused on the remarks from Fed Chair Jerome Powell, especially given the backdrop of prevailing tariff uncertainties and ongoing pressures from the administration to implement rate cuts.
In a notable development, US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer are scheduled to meet Chinese Vice Premier He Lifeng in Geneva this weekend. This meeting signifies a key moment in the trade dialogue, as it will be the first high-level engagement since US tariffs heightened global trade tensions. China’s Ministry of Commerce has confirmed its participation, having considered US proposals along with national interests and sentiments in the business community.
While the USD/CAD pair is recovering, the Canadian Dollar has found some stability, boosted by a shift in risk sentiment following a press conference with Canadian Prime Minister Mark Carney and President Trump. Following their joint appearance, Carney held a separate briefing to emphasize that discussions were constructive, suggesting a commitment to future talks, including a follow-up at the upcoming G7 meeting. No immediate decisions were made concerning tariffs, but both parties expressed a desire to advance discussions.
Nonetheless, challenges persist for the Canadian Dollar as domestic economic indicators raise concerns. Recent data revealed that Canada’s seasonally-adjusted Ivey PMI for April fell significantly short of expectations, registering at 48.0, compared to a forecast of 51.2. This decline points to a weakening in business sentiment, adding further complexity to the economic outlook for Canada amidst ongoing trade negotiations.
