- The USD/CAD pair has slipped to 1.3575 during Monday's Asian session.
- Increasing expectations for more substantial Fed rate cuts are putting pressure on the US Dollar.
- Bank of Canada's Governor Macklem has hinted at the possibility of speeding up interest rate reductions.
The USD/CAD pair lost ground during Monday's Asian trading session, falling to around 1.3575 due to a weaker US Dollar. The focus now shifts to the Federal Reserve's interest rate decision on Wednesday, with investors keenly watching for indications of how aggressively the Fed will cut rates.
Former New York Fed President William Dudley suggested on Friday that a half-point rate cut could be on the table as FOMC members aim for a "soft landing" for the economy. Rising expectations of more substantial Fed rate cuts are putting additional pressure on the Greenback. The CME FedWatch Tool shows the market has priced in nearly a 49% chance of a deeper Fed rate cut, a notable increase from 28% just a day earlier.
In other developments, the University of Michigan reported on Friday that the Consumer Sentiment Index climbed to 69.0 in September from 67.9 previously, surpassing the market consensus of 68.0.
On the Canadian side, Bank of Canada (BoC) Governor Tiff Macklem indicated on Sunday that he is open to accelerating the pace of interest rate cuts if economic growth falters. This could potentially weaken the Canadian Dollar (CAD) against the USD. However, lower crude oil prices might limit the downside for the CAD, given Canada's status as a major oil exporter to the US.
