USD/CAD corrects from 1.3600 as investors remain mixed about Fed Powell’s speech

• USD/CAD corrects from 1.3600 as investors await Fed Powell’s commentary at Jackson Hole.
• It is still a mystery whether Jerome Powell will advocate for raising interest rates or will deliver neutral guidance.
• Canada’s consumer spending expanded by 0.1% in June in line with the former reading.

The USD/CAD pair finds some selling pressure near the crucial resistance of 1.3600 in the London session. The Loonie asset corrects to near 1.3570 as investors remain mixed about Federal Reserve (Fed) Chair Jerome Powell’s speech at the Jackson Hole Symposium.

S&P500 futures have added decent gains in Europe, portraying some improvement in the risk appetite of the market participants. However, the market mood could turn cautious as Fed Powell is expected to take center stage at Jackson Hole sooner.

The US Dollar Index (DXY) corrected from the 11-week high of 104.26 as investors are sidelined due to uncertainty about Fed Powell’s speech. It is still a mystery whether Jerome Powell will advocate for raising interest rates further to tighten their grip on stubborn inflation or deliver a time period till interest rates remain steady at 5.25-5.50%. Meanwhile, the 10-year US Treasury yields have eased to near 4.24%.

The US Dollar could continue moving higher if Fed Powell delivers hawkish guidance on interest rates. Inflationary pressures in the United States economy in excess of the desired rate are extremely stubborn as the labor market is still tight and consumer spending is pretty good.

However, Fed policymakers: Boston Fed Bank President Susan Collin and Philadelphia Fed Bank President Patrick Harker commented on Thursday that the current interest rate level is enough to do the required job.

The Canadian Dollar failed to show action on Thursday despite nominal expansion in the monthly Retail Sales data for June. Consumer spending expanded by 0.1% in June in line with the former reading while investors anticipated a stagnant performance. Major consumer spending came in automobiles while discretionary spending remained weak.