USD/CAD drops sharply from three-week highs after US data
- US dollar tumbles after US inflation data, DXY back under 100.00.
- US CPI climbs to 8.5% in March, the highest since December 1981.
- USD/CAD slides to 1.2580 as crude oil soars and the dollar tumbles.
The USD/CAD retreated further from the highest level in almost a month above 1.2650 following the release of US inflation data. The pair printed a fresh daily low at 1.2580 and it remains with a negative bias, hovering around 1.2600.
Price up, dollar down
The slide of the USD/CAD intensified after data showed the US CPI in March rose 1.2%, in line with expectations, with the annual rate reaching the highest level since December 1981 at 8.5%.
The US dollar weakened after the report. The DXY turned negative and dropped back under 100.00, ending an eight-day positive streak. The key driver of dollar’s weakness was a recovery in Treasuries. The US 10-year yield dropped from multi-year highs at 2.83% to 2.70%, the 30-year pulled back under 2.80%.
Higher equity and crude oil prices are helping the loonie. The WIT barrel is rising more than 6% while the Dow Jones climbs 0.48%.
In Canada, the focus is on the Bank of Canada (BoC) that will announce is monetary policy decision on Wednesday. A rate hike is expected. “We look for the BoC to lift rates by 50bps, announce it will end its balance sheet reinvestment program by the end of the month, and signal that additional rate hikes will be needed. We also look for material upward revisions to 2022 GDP and inflation forecasts. Suffice it to say, this should be hawkish”, mentioned analysts at TD Securities.
Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
