- USD/CAD slides from the dollar rally tops and consolidates awaiting the next catalyst.
- Oil prices are elevated and support the Canadian dollar.
At 1.2853, the Canadian dollar is down by some 0.15% at the time of writing after sliding from a high of 1.2894 to a low of 1.2819 following a rise in the price of oil on Tuesday. The Canadian dollar is ultimately holding on to its gains from Friday, as the recent pullback in bond yields bolstered investor sentiment at the start of the week.
However, the inflation fears have advanced again and choppy trading persists, sinking US stocks midday at the same time that a consumer confidence gauge sank amid rising inflation expectations, undermining the improvement in investor sentiment after China relaxed certain COVID-19 restrictions. The Dow Jones Industrial Average slid over 1% with the S&P 500 down 1.5% and the Nasdaq Composite 2.44% lower by Tuesday afternoon. All three indexes traded higher earlier in the session.
The Conference Board's measure of consumer confidence fell to 98.7 in June from 103.2 in May while the Board's inflation expectations index rose to 8% from 7.5%, the highest since the series began in 1987.
Perky oil
Nevertheless, a booster for the commodity currency that is strongly linked to the energy sector, oil prices rose early on Tuesday after the G7 countries agreed to explore capping the price of Russian oil sold on the world market.
Additionally, French President Emmanuel Macron, citing a United Arab Emirates dignitary, reportedly said the UAE was producing crude at maximum capacity and that Saudi Arabia could only scale up its oil output by 150,000 barrels per day. At its annual summit in Germany, G7 leaders agreed to explore the possibility of capping the price of Russian oil to cut the country's take from exports as its invasion of Ukraine continues. West Texas Intermediate crude oil futures advanced 2.1% to $111.78 per barrel.
As for the greenback, bulls moved in on euro weakness as European Central Bank (ECB) President Christine Lagarde offered no fresh insight into the central bank's policy outlook. Lagarde said the central bank would move gradually but with the option to act decisively on any deterioration in medium-term inflation, especially if there were signs of a de-anchoring of inflation expectations.
The US dollar index (DXY), which had made a two-decade high of 105.79 this month, was last up 0.46% at 104.420. The DXY had been as low as 103.77 and as high as 104.606.
For the Canadian economy, the Canadian Finance Minister Chrystia Freeland on Sunday said the economy still has a path to a "soft landing," where it could stabilize economically after the blow by the COVID-19 pandemic, without facing a severe recession that many fear.
In this regard, traders are in anticipation of Industry Level Gross Domestic product month on month for April this week, 30 June. Analysts at TD Securities expect industry-level GDP to rise by 0.3% in April, slightly above the flash estimate for a 0.2% rise. ''Look for increases in activity in both the goods and services sectors, but with goods leading the way. The flash estimate for May will be of particular interest, particularly given recent deterioration in consumer confidence.''
Nevertheless, speculators have cut their bullish bets on the Canadian dollar, data from the US Commodity Futures Trading Commission showed on Friday. As of June 21, net long positions had fallen to 4,105 contracts from 23,202 in the prior week.
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
Editors’ Picks
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up. The pair traded at 0.6518.
EUR/USD mired near 1.0730 after choppy Thursday market session
EUR/USD whipsawed somewhat on Thursday, and the pair is heading into Friday's early session near 1.0730 after a back-and-forth session and complicated US data that vexed rate cut hopes.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Ethereum could remain inside key range as Consensys sues SEC over ETH security status
Ethereum appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after Consensys filed a lawsuit against the US SEC and insider sources informing Reuters of the unlikelihood of a spot ETH ETF approval in May.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.