USD/CAD approaches 1.3750 as Fed to delay rate cuts


  • USD/CAD jumps to 1.3735 as the Canadian Dollar weakens on dismal market sentiment.
  • Investors turn risk-averse as trades priced out Fed rate cut hopes for June.
  • BoC Macklen sees expectations for the Fed pivoting to rate cuts in June as reasonable.

The USD/CAD pair is advancing towards 1.3750 in Friday’s London session. The Loonie asset extends its winning spell for the third trading session as investors see the Federal Reserve (Fed) pivoting to rate cuts by the third quarter of this year.

Speculation about the Fed delivering rate cuts has waned as consumer price inflation in the United States turned sticky in March. Also, the core Producer Price Index (PPI) data, which shows an increase or decrease in the prices of goods and services, excluding food and energy prices, by owners at factory gates, remains hotter than expected. The annual core PPI grew by 2.4% from estimates of 2.3% and the prior reading of 2.0%.

For now, investors anticipate that the Fed could begin reducing interest rates after the September meeting. Also, investors expect that there will be two rate cuts instead of three, as projected by Fed policymakers in the latest dot plot.

Faded expectations for the Fed lowering interest rates from the June meeting have dented appeal for risk-sensitive assets. S&P 500 futures have posted some losses in the European session. The US Dollar Index (DXY) extends its upside to 105.85. The scenario of the Fed keeping interest rates higher for a longer period bodes well for the US Dollar.

On the Loonie front, the Canadian dollar has weakened due to firm market expectations that the Bank of Canada (BoC) will start lowering borrowing rates in June. After maintaining the status quo on Wednesday, BoC Governor Tiff Macklem said a rate cut in June is possible.

Going forward, expectations of more upside in global oil prices due to escalating geopolitical tensions could support the Canadian Dollar. Fears of Iran’s confrontation with Israel heightened after air strikes on the Iranian embassy in Damascus by the Israeli forces. Also, Israel is preparing to invade Rafae where displaced Palestinians have sheltered.

It is worth noting that Canada is the leading oil exporter to the United States, and higher oil prices support the Canadian Dollar.

USD/CAD

Overview
Today last price 1.3742
Today Daily Change 0.0053
Today Daily Change % 0.39
Today daily open 1.3689
 
Trends
Daily SMA20 1.357
Daily SMA50 1.3533
Daily SMA100 1.3483
Daily SMA200 1.3512
 
Levels
Previous Daily High 1.3726
Previous Daily Low 1.3661
Previous Weekly High 1.3648
Previous Weekly Low 1.3478
Previous Monthly High 1.3614
Previous Monthly Low 1.342
Daily Fibonacci 38.2% 1.3701
Daily Fibonacci 61.8% 1.3686
Daily Pivot Point S1 1.3658
Daily Pivot Point S2 1.3627
Daily Pivot Point S3 1.3593
Daily Pivot Point R1 1.3723
Daily Pivot Point R2 1.3757
Daily Pivot Point R3 1.3788

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD recovers toward 1.0850 as risk mood improves

EUR/USD recovers toward 1.0850 as risk mood improves

EUR/USD gains traction and rises toward 1.0850 on Friday. The improvement seen in risk mood makes it difficult for the US Dollar (USD) to preserve its strength and helps the pair erase a portion of its weekly losses. 

EUR/USD News

GBP/USD stabilizes above 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD stabilizes above 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD staged a rebound and stabilized above 1.2700 after dropping to a weekly low below 1.2680 in the early European session in response to the disappointing UK Retail Sales data. The USD struggles to find demand on upbeat risk mood and allows the pair to hold its ground. 

GBP/USD News

Gold rebounds to $2,340 area, stays deep in red for the week

Gold rebounds to $2,340 area, stays deep in red for the week

Gold fell nearly 4% in the previous two trading days and touched its weakest level in two weeks below $2,330 on Thursday. As US Treasury bond yields stabilize on Friday, XAU/USD stages a correction toward $2,340 but remains on track to post large weekly losses.

Gold News

Dogecoin inspiration Kabosu dies, leaving legacy of $22.86 billion market cap meme coin behind

Dogecoin inspiration Kabosu dies, leaving legacy of $22.86 billion market cap meme coin behind

Kabosu, the popular Shiba Inu dog that inspired the logo of the largest meme coin by market capitalization, Dogecoin (DOGE), died early on Friday after losing her fight to leukemia and liver disease.

Read more

Week ahead – US PCE inflation and Eurozone CPI data enter the spotlight

Week ahead – US PCE inflation and Eurozone CPI data enter the spotlight

Dollar traders lock gaze on core PCE index. Eurozone CPIs in focus as June cut looms. Tokyo CPIs may complicate BoJ’s policy plans. Aussie awaits Australian CPIs and Chinese PMIs.

Read more

Forex MAJORS

Cryptocurrencies

Signatures