Ella 
USD/CAD extended its gains for the fourth consecutive session, trading around the key 1.3540 level. The U.S. dollar (USD) is trading higher, driven by rising U.S. Treasury yields. The bond market came under selling pressure as more signs that the U.S. economy remained resilient prompted investors to revise their expectations for fewer rate cuts this year.
The CME FedWatch tool puts the probability of a rate cut at 1.0% in March and 8.7% in May. The probability of interest rate cuts in June and July is low, at 55.1% and 73.7% respectively.
The U.S. dollar index continued to rise, with the two-year U.S. Treasury yields and the 10-year U.S. Treasury yields at 4.73% and 4.32% respectively. Investors are focusing on the Federal Reserve’s interest rate decision expected to be released on Wednesday. The Federal Reserve is expected to maintain high interest rates to combat recent inflationary pressures.
Considering Canada is the largest oil exporter to the United States, a spike in crude oil prices could boost the Canadian dollar. WTI oil prices hovered around $82.10 a barrel, near their highest levels since early November, with continued concerns about crude supplies providing support.
Canadian stocks closed slightly lower on Monday as investors awaited Canadian consumer price index (CPI) data due to be released on Tuesday. The market expects Canadian consumer prices to rise.
