The Federal Reserve is expected to keep interest rates at 5.50% to control inflation and achieve the 2% target. Additionally, the Core CPI forecast for May is expected to increase to 3.5% year-on-year.

Strong U.S. employment data in May has reduced expectations that the Federal Reserve will cut interest rates twice in 2024. According to the CME FedWatch Tool, the probability of the Fed cutting interest rates by at least 25 basis points in September has decreased to 49.0% from 59.5%.

The current decline in crude oil prices is putting pressure on the commodity-linked Canadian dollar since Canada is the largest oil exporter to the United States. Crude oil prices are supported by increased fuel demand during the summer.