USD/CAD pair rises modestly ahead of BoC rate decision this week

Key Movers

he US Dollar Index (DXY) dropped by around -0.03% near the 104.334 level this morning following President Joe Biden’s withdrawal announcement from the US presidential race over the weekend. Biden endorsed his current Vice President Kamala Harris as the new democratic candidate. This decision is expected to have repercussions across the world’s financial markets, beginning with them modest decline in the USD so far today against other major currencies.

In Eurozone news, the EUR/USD pair traded close to 1.0870 this morning. The pair remained mostly steady amid increased speculation that the European Central Bank (ECB) will cut interest rates two more times this year. ECB policymaker Francois Villeroy de Galhau said in an interview on French radio BFM Business, "Market expectations for the path of interest rates seem rather reasonable to me at the moment," Reuters reported.

The GBP, on the other hand, continued to draw support from decreased expectations of an interest rate cut by the Bank of England (BoE) in August. In fact, BoE Chief Economist Huw Pill noted earlier this month that there is still some work to do before the persistent inflation is gone.

The JPY broke two days of losses today as traders geared up for the Bank of Japan’s (BoJ) policy meeting next week. Markets believe an interest rate hike might be on the table to support the JPY. Japan’s Prime Minister Fumio Kishida stated that normalizing the central bank’s monetary policy would aid Japan's shift to a growth-driven economy.