Canadian Dollar falls back against US Dollar ahead of US flash PMI data

USD/CAD recovers to near 1.4185 due to the US Dollar’s continued outperformance.
The Fed is highly anticipated to raise interest rates this year.
Higher inflation and economic concerns pose stagflation risks in the Canadian economy.

Sagar Dua FXStreet

The Canadian Dollar (CAD) retreats against the US Dollar (USD) on Tuesday after a short-lived pullback move the previous day. The USD/CAD pair rebounds to near 1.4185 as the US Dollar outperforms its peers due to firm expectations that the next monetary policy adjustment by the Federal Reserve (Fed) will be on the upside.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% higher to near 101.10, the highest level seen in over a year.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.05%	0.04%	-0.03%	0.11%	0.63%	0.40%	-0.04%
EUR	0.05%		0.07%	0.00%	0.14%	0.64%	0.43%	-0.01%
GBP	-0.04%	-0.07%		-0.04%	0.08%	0.59%	0.36%	-0.07%
JPY	0.03%	0.00%	0.04%		0.12%	0.64%	0.41%	-0.04%
CAD	-0.11%	-0.14%	-0.08%	-0.12%		0.52%	0.30%	-0.15%
AUD	-0.63%	-0.64%	-0.59%	-0.64%	-0.52%		-0.20%	-0.65%
NZD	-0.40%	-0.43%	-0.36%	-0.41%	-0.30%	0.20%		-0.46%
CHF	0.04%	0.00%	0.07%	0.04%	0.15%	0.65%	0.46%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

According to the CME FedWatch tool, the odds of the Fed hiking interest rates this year are almost 87%.

Hawkish Fed bets have escalated due to consistently accelerating core inflationary pressures and an improvement in labor demand.

Meanwhile, investors await the US preliminary S&P Global Purchasing Managers’ Index (PMI) data for June, which will be published at 13:45 GMT. The US Services PMI is expected to arrive at 51.0, higher than 50.7 in May. Meanwhile, the Manufacturing PMI will likely come in lower at 54.7 from the previous reading of 55.1.

In the Canadian region, accelerating inflationary pressures and growing economic concerns have prompted fears of a stagflation. On Monday, Statistics Canada reported that the headline inflation rose to 3.2% Year-on-Year (YoY), higher than 3% estimates and the previous reading of 2.8%.

In the policy announcement last week, Bank of Canada (BoC) Governor Tiff Macklem warned of downside economic risks in the monetary policy conference. “Economy is weak but clearly not in recession,” Macklem said.

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by Statistics Canada on a monthly basis, represents changes in prices for Canadian consumers by comparing the cost of a fixed basket of goods and services. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.

GBP/USD holds losses below 1.3250 on UK politics, PMIs eyed

GBP/USD loses ground below 1.3250 in the European session on Tuesday. Political uncertainty in the United Kingdom continues to weigh on the British Pound, while the US Dollar capitalizes on the risk-off mood and hawkish Fed bets. The UK and US S&P Global preliminary PMI data are next of note for the major.

EUR/USD stays weak below 1.1450 after German, EU PMI data

EUR/USD struggles to stage a rebound and trades below 1.1450 in the European session on Tuesday, after the data from Germany showed that the Composite PMI declined to 48 in June from 48.8 May, while that from the Eurozone rose to 49.5. Meanwhile, the US Dollar holds the upper hand against the Euro amid risk-off sentiment and a hawkish Fed outlook, leaving the pair on the defensive. Traders now await the US PMI data.

Gold drops to nearly two-week low, seems vulnerable amid Fed hike bets, bullish USD

Gold adds to its Asian session losses, and drops to a nearly two-week low, around the $4,115 region in the last hour amid a bullish US Dollar. Despite positive signals from US-Iran peace talks, widespread skepticism remains toward a final deal. This helps the USD in preserving its recent strong gains to the highest level since May 2025.

Bears cap Solana below $75 as ETF, retail demand wanes

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Big day of PMIs ahead

In the euro area, June flash PMIs are released. Most respondents will likely have answered after the US-Iran deal, yet the impact of lower oil prices is unlikely to already show up in activity data. We expect manufacturing to edge down to 50.9 (May: 51.6), while we expect services to see a modest improvement to 48.8 (May: 47.7).

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