USD/CAD corrects to near 1.3700 as investors digest hopes of Fed’s 25 bps rate hike


  • USD/CAD has slipped to near 1.3700 as investors have shrugged off fears of a consecutive 25 bps Fed rate hike.
  • Tighter credit, economic contraction, and falling inflation could lead to rate cuts by the Fed this year.
  • Declining Canada’s inflation indicates that the BoC could continue its steady stance on interest rates.

The USD/CAD pair is showing a corrective move after failing to extend its recovery above 1.3740 in the Asian session. On Monday, the Loonie asset showed a solid recovery from 1.3660 after a decline in Canada’s inflation data. Declining Canada’s Consumer Price Index (CPI) data confirmed that the Bank of Canada (BoC) could continue with its unchanged policy stance.

BoC Governor Tiff Macklem is keeping its policy stance steady as he believes that the monetary policy is restrictive enough to achieve price stability. However, BoC Macklem has remained doors open for further hikes if the roadmap of bringing down inflation goes south.

Statistics Canada reported that monthly inflation has accelerated by 0.4%, lower than the consensus of 0.6% and the former release of 0.5%. The headline CPI softened to 5.2% vs. the consensus of 5.4% and the prior release of 5.9%. Apart from them, annual core CPI that doesn’t inculcate oil and food prices dropped to 4.7% from the previous figure of 5.0% but remained higher than the estimates of 4.6%. Overall, the decline in inflation was quite impressive for the BoC, which has already pushed interest rates to 4.5%.

Meanwhile, S&P500 futures are showing a subdued performance after two-day of bulk buying. Investors’ risk appetite is extremely strong as the odds are favoring a consecutive 25 bps rate hike by the Federal Reserve (Fed). The US Dollar Index (DXY) is struggling in maintaining its feet above 103.20 as fears of banking sector turmoil are not faded yet. Also, analysts at UBS are of the view that tighter credit, economic contraction, and falling inflation could lead to rate cuts by the Fed this year.

USD/CAD

Overview
Today last price 1.3711
Today Daily Change -0.0001
Today Daily Change % -0.01
Today daily open 1.3712
 
Trends
Daily SMA20 1.3677
Daily SMA50 1.3509
Daily SMA100 1.3511
Daily SMA200 1.3348
 
Levels
Previous Daily High 1.3738
Previous Daily Low 1.3644
Previous Weekly High 1.3828
Previous Weekly Low 1.3652
Previous Monthly High 1.3666
Previous Monthly Low 1.3262
Daily Fibonacci 38.2% 1.3702
Daily Fibonacci 61.8% 1.368
Daily Pivot Point S1 1.3659
Daily Pivot Point S2 1.3605
Daily Pivot Point S3 1.3566
Daily Pivot Point R1 1.3752
Daily Pivot Point R2 1.3791
Daily Pivot Point R3 1.3845

 

 

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