USD/CAD holding firm around 1.3460 awaiting speech by Fed’s Powell and BoC’s Macklem

• USD/CAD holds gains as traders prepare for Federal Reserve Chairman Jerome Powell’s speech.
• The US trade deficit increased, although market participants ignored it.
• Bank of Canada Governor Tiff Macklem will comment later.

He USD/CAD extends its gains to four straight days, but remains below the weekly high of 1.3475, meandering around 1.3460, after hitting a daily low of 1.3401, far from the 20-day EMA at 1.3399. At the time of writing, the USD/CAD pair was trading at 1.3457, posting a minuscule gain of 0.08%.

USD/CAD remains propped up by a bullish dollar

Wall Street opened in the red, except for the Nasdaq 100. Traders prepare for US Federal Reserve (Fed) Chairman Jerome Powell’s speech at the Economic Club of Washington around 17:00 GMT . Investors are waiting for Powell’s response after the release of a strong jobs report last Friday, in which the US economy added 517,000 jobs in January, against expectations of almost 200,000 jobs. Consequently, the Unemployment Rate dropped from 3.5% to 3.4%. Taken together, such a tight job market would justify further tightening by the Fed.

In terms of data, the US Department of Commerce revealed that the trade deficit increased 10.5% to $67.4 billion, up from $61 billion in November, but below market expectations of $68.5 billion. of dollars.

Elsewhere, Minnesota Fed President Neil Kashkari crossed wires, saying he expects the Fed Fund rate to be around 5.4% due to the stronger-than-expected labor market report that showed the bank US central bank needs to keep raising rates. He reported that “nobody should overreact to a single report” but added that the strength of the services sector remains very strong, and “that’s where I think a lot of us are focusing our attention.”

Meanwhile, the US Dollar Index, which tracks the dollar against six currencies, continued to post gains, up 0.28% to , a tailwind for the USD/CAD pair. However, crude oil prices remain under pressure after the earthquake in Turkey and Syria, which disrupted the activity of one of the Turkish ports that in January exported around 1% of world supplies. Therefore, WTI changes hands at $75.47, up 1.44%, limiting the USD/CAD recovery.

Apart from this, Statistics Canada revealed that its trade balance narrowed, compared to December data, as lower crude oil prices weighed on energy exports and imports of consumer goods fell, according to Reuters. Also, USD/CAD traders could get some signals as Bank of Canada (BoC) Governor Tiff Macklem is due to make a statement around 17:30 GMT. Since the BOC announced a pause after raising rates to 4.50%, it could weigh on the Loonie (CAD). Therefore, any dovish signs could pave the way for a further USD/CAD rally, albeit capped by rising Oil prices.

Key USD/CAD Technical Levels