USD/CAD extends upside to near 1.3770 on hawkish Fed improves US Dollar’s outlook


  • USD/CAD rises further to 1.3770 as the Fed’s hawkish policy update dampens market sentiment.
  • Fed Mester agreed that the disinflation process has resumed.
  • Canada’s Manufacturing Sales grew by 1.1% in April on month, missing estimates of 1.2%.

The USD/CAD pair extends its upside to near 1.3770 in Friday’s American session. The Loonie asset strengthens as the US Dollar (USD) rises further due to a hawkish interest rate update by the Federal Reserve (Fed). Latest interest rate projections from Fed policymakers indicate that there will be only one rate-cut instead of three forecasted in March.

Fed’s hawkish policy has weakened the risk appetite of market participants. Considering bearish overnight futures, the S&P 500 is expected to open on a bearish note. The US Dollar Index (DXY), which tracks the greenback’s value against six major currencies, jumps to 105.70. While 10-year US Treasury yields have declined to 4.22% as financial markets expect that the Fed will deliver two rate cuts.

According to the CME FedWatch tool, 30-day Fed Funds futures pricing data shows that traders see a 65% chance that there will be a rate-cut decision in the September. The probability has significantly improved from 50.5% recorded a week ago.

Market expectations for Fed rate cuts in September increased after the United States (US) consumer and producer inflation data for May turned out softer than expected.

Meanwhile, Cleveland Fed Bank President Loretta Mester appeared in an interview with CNBC after the completion of the blackout period due to the Fed’s monetary policy meeting. Mester acknowledged that the disinflation process has resumed after stalling, however, policymakers want to see price pressures cooling further from their current levels to gain confidence for rate cuts. She also cautioned that the current monetary policy is impacting the economy and it is important not to wait too long to cut interest rates.

On the Canadian Dollar front, Statistics Canada showed that Manufacturing Sales grew at a slightly slower pace of 1.1% than expectations of 1.2% in April. The economic data contracted by 1.8% in March, downwardly revised from 2.1%.

USD/CAD

Overview
Today last price 1.3769
Today Daily Change 0.0026
Today Daily Change % 0.19
Today daily open 1.3743
 
Trends
Daily SMA20 1.3685
Daily SMA50 1.3689
Daily SMA100 1.3601
Daily SMA200 1.358
 
Levels
Previous Daily High 1.3764
Previous Daily Low 1.3715
Previous Weekly High 1.3768
Previous Weekly Low 1.3603
Previous Monthly High 1.3783
Previous Monthly Low 1.359
Daily Fibonacci 38.2% 1.3745
Daily Fibonacci 61.8% 1.3734
Daily Pivot Point S1 1.3717
Daily Pivot Point S2 1.3692
Daily Pivot Point S3 1.3669
Daily Pivot Point R1 1.3766
Daily Pivot Point R2 1.3789
Daily Pivot Point R3 1.3815

 

 

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