USD Gains on Risk Aversion Amid Powell Resignation Speculation and Trump’s Tariffs Weigh on CAD

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3600-1.3840

Euro                 1.5840-1.6090

Sterling            1.8340-1.8590

WTI Oil (opening level) $68.23

The CAD/USD is opening at 1.3724 ( 0.7287 )

·    The US Dollar extends gains on risk-averse markets amid rising rumours about Fed Powell’s resignation.

·    Anxiety about Trump’s tariffs is also weighing on the CAD as the August 1 deadline approaches.

·    Oil prices could pose additional headwinds on the CAD

USD is retracing previous losses against the Canadian Dollar on Thursday, with markets averse to risk amid rising speculation that Federal Reserve Chairman Jerome Powell will be forced to resign under pressure from Trump.

Trump said that the possibility of firing the Fed chairman is “highly unlikely,” but he admitted to having discussed the possibility with Republican policymakers before stating that he would like him to resign.

Shortly afterwards, he mentioned the possibility of ousting him on fraud charges related to a USD 2.5 billion renovation plan for the central bank’s headquarters, which left investors wondering about the future of the Fed chief.

The unprecedented standoff between a US President and the Fed chairman has boosted risk aversion, so far supporting the safe-haven US Dollar.

Beyond that, US Producer Prices Index data revealed that inflationary pressures at factory gates stalled in May, while the yearly inflation moderated to 2.3% from May’s 2.6%. These figures soothed fears of another inflationary cycle, triggered by Tuesday’s CPI data.

The Canadian Dollar remains on the back foot after Trump set a 35% tariff on Canadian imports, which adds to a 50% levy on Steel and aluminium, while the negotiations for a better deal seem stalled.