USD/CAD TRADES WITH MILD GAINS ABOVE 1.3600, FED CUTS RATES FOR FIRST TIME IN FOUR YEARS

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  • USD/CAD trades in positive territory near 1.3605 in Thursday’s early Asian session. 
  • The Fed lowered its benchmark interest rate by a half percentage point at its September meeting on Wednesday. 
  • Both faster rate cuts and slower cuts are on the table, noted the BoC deliberations.

The USD/CAD pair posts modest gains around 1.3605 during the early Asian session on Thursday. Traders continue to assess the Federal Reserve’s (Fed) 50 basis points (bps) interest rate cut in quite a volatile session on Wednesday. Investors will keep an eye on the US weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Existing Home Sales, which are due later in the day. 

The Federal Open Market Committee (FOMC) decided to lower the federal funds rate to a range of 4.75% to 5%, the Fed’s first rate cut in more than four years. Fed Chair Jerome Powell said in a press conference following the monetary policy meeting, “This decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2%.”

The US Dollar (USD) initially edged lower after the Fed decision, but pared losses after Chair Jerome Powell finished his press conference. Furthermore, Fed policymakers revised their quarterly economic forecasts, raising the median projection for unemployment by the end of 2024 to 4.4% from the 4% projection in June. Officials again raised their projection for the long-run federal funds rate to 2.9% from 2.8%. 



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