Investing.com – The Canadian dollar weakened against its US counterpart today, pressured by risk-off sentiment in equities, and broad based USD strength.
The US dollar rallied against a basket of currencies as hawkish Fed speak, rising US Treasury yields, and robust US economic data boosted the greenback.
The main driver of markets was comments from Federal Reserve Chair Jerome Powell over the weekend.
In an interview on 60 minutes, Fed Chairman Jerome Powell said that the Fed would be "prudent" when considering rate cuts, further dampening hopes of rate cuts in March.
Minneapolis Fed President Neel Kashkari also struck a hawkish note in an essay, writing that “This constellation of data suggests to me that the current stance of monetary policy … may not be as tight as we would have assumed”.
Money markets are now pricing in less than a 15% chance of a rate cut in March.
US economic data also supported the case for rates remaining higher for longer than had been anticipated at the beginning of 2024, with US Services PMI hitting an eleven month high.
Canadian economic data on the docket meanwhile struck a negative note, with Canadian sector activity meanwhile declining for an eight consecutive month in January, as per the S&P Global (NYSE:SPGI) Canada services PMI.