- USD/CAD has been rangebound around the 1.2700 area and is flat ahead of comments from Fed Chair Powell.
- Neither comments from BoC’s Lane now softer than expected US CPI data had any lasting impact on the currency pair.
USD/CAD is having a subdued day; price action has, for the most part, stayed between 1.2680-1.2710 parameters and the pair is currently flat on the day. The loonie has thus largely failed to garner any traction from further upside being seen in crude oil markets (which are on for a ninth day of successive gains at the moment) and USD weakness seen in wake of a softer than anticipated US Consumer Price Inflation reading did not last long.
Central bankers in focus
Comments from Bank of Canada Deputy Governor Timothy Lane did not seem to move the dial much for the Canadian dollar given that his remarks focused mostly on the prospect for the bank introducing its own digital currency. Lane said that the pandemic has accelerated the bank’s work to prepare for a possible launch of its own digital currency, but noted that the currency would only be issued “when the time is right”.
In fitting with other major global central bankers such as ECB President Christine Lagarde, Lane was critical of popular cryptocurrencies at the moment such as Bitcoin; Lane said that Bitcoin does not have a plausible path to become money of the future and that the recent spike in cryptocurrencies looks more like “speculative mania”.
Looking ahead, central bank speaker maintains centre stage. Chairman of the US Federal Reserve Jerome Powell is speaking at the Economic Club of New York at 19:00GMT and is likely to reiterate the Fed’s current monetary policy stance regarding the ongoing need for accommodative Fed policy for the foreseeable future or at least until the US has made significant progress towards the Fed’s policy mandate. That means Powell will reiterate that he wants to see inflation raising above the Fed’s 2% target on a sustained basis, a definition the expected temporary rise in the YoY rate of inflation in the coming months is not anticipated to meet (in other words, Powell is likely to say the Fed will look through any transitory increased in inflation).
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