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USD/CAD halted a four-day downtrend during Tuesday’s Asian session, trading around 1.3890. The US dollar (USD) gained slightly as it attempted to stabilize amid growing concerns over stagflation. Traders will likely focus on the Bank of Canada’s core consumer price index data due later in the day.
Atlanta Federal Reserve Bank President Rafael Bostic told a market conference early Tuesday that the U.S. central bank still has a long way to go to achieve its 2% inflation target, casting doubt on market expectations for further rate cuts.
Deutsche Bank now predicts a 25 basis point rate cut in December, reversing its previous stance of no cuts until 2025, followed by two more cuts in the first quarter of 2026. The terminal interest rate is expected to be between 3.5%–3.75%.
Meanwhile, the Canadian dollar (CAD), a risk-sensitive currency, found support amid improved sentiment after U.S. President Donald Trump announced tariff exemptions for certain tech products such as smartphones, laptops and other electronics. The move helped ease concerns about a broader economic slowdown sparked by escalating U.S.-China trade tensions.
Canada’s 10-year government bond yield fell to 3.12% on Tuesday, retreating from a recent high of 3.27% recorded on April 11, as investors adjusted their response to changing trade dynamics and ongoing global uncertainty in line with broader market trends.
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