USD/CAD scales higher to 1.2600 on progressive odds of Fed’s rate hike, Canada’s Retail Sales eyed
|- USD/CAD is hovering around 1.2600 as investors await Canada’s Retail Sales.
- Loonie bulls are underperforming amid lackluster performance from oil.
- Powell’s testimony at the IMF meeting has strengthened the odds of a 50 bps rate hike.
The USD/CAD pair is witnessing back and forth moves in the Asian session after a sheer upside on Thursday. The greenback bulls have driven the asset to near 1.2600 after a solid reversal from 1.2460. A stellar performance by the major banks upon rising odds of an interest rate hike by the Federal Reserve (Fed) in May.
The aggressive hawkish tone picked by Fed chair Jerome Powell in his speech at International Monetary Fund (IMF) meeting on Thursday has bolstered the event of a jumbo rate hike. Fed’s Powell, in his speech, stated that an interest rate elevation by 50 basis points (bps) is on the cards. He also added that to corner the inflation, Fed may resort to a healthy pace in advancing current policy rates to a neutral one.
On the denominator front, loonie bulls faced pressure while dragging the asset for further downside as investors shrugged off the higher inflation print reported by Statistics Canada on Wednesday. Canada’s yearly Consumer Price Index (CPI) landed at 6.7% against the preliminary reading of 6.7%. Also, the yearly core CPI printed at 5.5%.
Adding to that, stagnant oil prices have also dampened the demand for loonie against the greenback. Oil prices are steady at around $103.00 amid supply worries and a significant cut in the global growth forecasts. It is worth noting that the loonie is oil-sensitive as Canada is the largest exporter of oil to the US.
Going forward, investors will focus on the release of Canada’s Retail Sales. The monthly Retail Sales are seen at -0.1% against the prior print of 3.2%.
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