• USD/CAD appreciates as Trump’s proposed fiscal policies could heighten inflation risks, prompting the Fed to adopt hawkish stance.
• Michigan Consumer Sentiment Index rose to 73.0 in November, exceeding 70.5 prior and expected 71.0 readings.
• The commodity-linked Canadian Dollar faces challenges due to lower crude Oil prices.

USD/CAD seems to extend its gains as US Dollar (USD) appreciates as traders anticipate a less dovish stance from the Federal Reserve (Fed), as Donald Trump is likely to pursue his campaign promises to enact substantial tariffs, including a 10% increase on imports and a reduction in corporate taxes. The USD/CAD pair trades around 1.3920 during the Asian session on Monday.

Trump’s fiscal policies could lead to higher investment, spending, and labor demand, elevating inflation risks. This could prompt the Fed to adopt a more restrictive monetary policy. However, Fed Chair Jerome Powell stated on Thursday that he doesn’t anticipate Trump’s potential return to the White House impacting the Fed’s near-term policy decisions.

On Friday, the preliminary University of Michigan Consumer Sentiment Index rose to 73.0 in November, up from 70.5 in October and exceeding the market’s expectation of 71.0. This upbeat data has broadly strengthened the Greenback.