USD/CAD Rate Eyes March Low Ahead of FOMC Rate Decision: An economic indicator analysis that projects a possible increase in U.S. Dollar against other major currencies during the month of March due to Federal Reserve’s anticipated decision
on whether to raise its U.S. Dollar Policy Rate (DVR). The current outlook for the USD/CAD is also supported by some analysts who believe that the economy is moving into a new phase, but it could be more complicated than previously thought, as it is possible that the U.S. Economic Recovery Plan (ERP) is not yet complete and that more measures are needed.
A change in the U.S. Dollar’s Exchange Rate against the Japanese Yen (JPY) or the Euro (EUR) could result in higher export costs for exporters, causing the USD/CAD Rate Eyes March Low Ahead of FOMC Rate Decision to rise. The move towards a stronger US Dollar is expected because the U.S. economy is nearing a point of equilibrium, which means that a prolonged period of low inflation will lead to stable economic growth. Meanwhile, the U.S. Dollar Exchange Rate is expected to remain relatively strong due to lower rates in countries like India and China, as they are in need of new sources of capital for expansion.
The FOMC Rate Decision is scheduled for three rounds of rate cuts. However, the most recent cuts are still expected to be released before the end of March. This means that the Federal Reserve is waiting for the market to adjust to the news of a possible increase in its Dollar Policy Rate. If the market were to react negatively, the Dollar is likely to retreat sharply, which would further affect the value of the Dollar against the major currency pairs.
The most common forecast for the strength of the USD/CAD rate is an increase of about two percent between now and the end of the first quarter, although it can vary depending on whether the current economic situation or the FOMC Rate Decision is considered. The latest economic data has already strengthened the Dollar’s exchange rate against other major currencies, with the unemployment numbers released last week showing a slight improvement in U.S. Gross Domestic Product (GDP). The FOMC Rate Decision will therefore be announced in mid-March, which is four to five weeks before the announcement of other quarterly FOMC Rate Raises. It is expected that the U.S. Federal Reserve will announce an increase of two percent during the first quarter, followed by another one percent at the end of April. A fourth rate cut will take place in June. It is therefore possible that the U.S. Dollar will break its USD/CAD rate low ahead of the FOMC Rate Decision at this point.
The U.S. economy should then begin to show signs of stability after the release of the Federal Reserve’s U.S. Economic Report (ESR) in May, which will include monthly gross domestic product figures and employment data, and a detailed statement on its efforts to revitalize the economy. It is therefore likely that the USD/CAD will fall back toward the lower range after the FOMC Rate Decision, as the market takes a wait and watch approach to the upcoming announcements.
Meanwhile, other indicators of strengthening U.S. Dollar such as the U.S. Dollar Index (USD/CAD), which measures the currency’s value against a basket of six major currencies, has been dropping recently due to a number of global factors, including global economic concerns. One of these is the possibility that China, the world’s second largest economy, may make a move against the US Dollar in response to the U.S. Federal Reserve’s impending move.
Many experts are also concerned about China’s trade surplus with the U.S., which is believed to be one of the reasons why the Chinese government made a sudden move in August. to increase its quota on U.S. Treasuries. If the Chinese move is successful and the U.S. dollar strengthens against the Japanese Yen (JPY), this would mean that the U.S. Dollar Index will soon rise in value against other major currencies, and lead to a weakening of