USD/CAD correction extends to 1.3700 as Fed Chair Powell sees inflation risks becoming more balanced

• The USD/CAD pair recorded a sharp correction after Fed Chairman Powell acknowledged progress in reducing inflation.
• Fed Chair Powell sees risks to price pressures as more balanced.
• This week, investors will be closely watching June labor market data from the United States and Canada.

The USD/CAD pair extends its correction to approach the 1.3700 round-figure support level in the New York session on Tuesday. The Canadian dollar asset declines as the US dollar retreats after Federal Reserve Federal Reserve Chairman Jerome Powell’s Comment on European Central Bank Forum on Central Banks in Sintra, Portugal.

Federal Reserve Chairman Powell said the central bank has made some progress on inflation and the latest data suggests deflation is resuming. However, he stressed that more good inflation data is needed before cutting interest rates. Powell added that risks to inflation are more balanced. He also said that unexpected weakness in the labor market could force them to respond with interest rates.

The US Dollar Index (DXY), which tracks the value of the US dollar against six major currencies, fell to 105.80.

In the future, the main catalyst for the US dollar will be United State (we) Non-farm payrolls Non-Farm Payrolls (NFP) data for June, which will be released on Friday.

at the same time, Canadian Dollar The Canadian dollar remains under pressure despite higher-than-expected May inflation data dampening expectations that the Bank of Canada will cut interest rates in succession.

This week, the Canadian dollar will dance to the tune of June employment data, which will be released on Friday. Economists expect the unemployment rate to rise to 6.3% from 6.2% in the previous release. Canadian employers hired 22.5K workers, down from the previous reading of 26.7K.