Photo by Michelle Spollen on Unsplash

• USD/CAD gains momentum to near 1.4295 in Wednesday’s early European session. 
• Fed’s Powell signaled there is no urgency to cut interest rates.
• A rise in crude oil prices underpins the commodity-linked Loonie. 

The USD/CAD pair gathers strength to around 1.4295 on Wednesday during the early European session, bolstered by a firmer US Dollar (USD). The US Consumer Price Index (CPI) inflation data for January will be the highlight later on Wednesday. 

US President Donald Trump signed proclamations imposing tariffs on steel and aluminum imports, including those from Canada. However, the restrictions will not take effect until March 12.

In his semi-annual report to Congress, Federal Reserve (Fed) Chair Powell stated that Fed officials are in no rush to cut interest rates due to a strong job market and solid economic growth. He added that Trump’s tariff policies could drive prices higher, complicating the Fed’s ability to lower rates. The cautious stance of the US central bank is likely to lift the Greenback in the near term.

On the other hand, crude oil prices edge higher as sanctions raised concerns about Russian and Iranian oil supplies and rising Middle East tensions. This, in turn, could provide some support to the commodity-linked Loonie and create a headwind for USD/CAD. It's worth noting that Canada is the largest oil exporter to the United States (US), and higher crude oil prices tend to have a positive impact on the CAD value.

More By This Author: