USD/CAD makes a sharp U-turn, slumps below 1.3430

  • Treasury Sec. Mnuchin says they are close to deal with Canada on tariffs.
  • BoC's core CPI drops to 1.5% in April.
  • US Dollar Index turns flat near 97.50 

The USD/CAD pair rose to a weekly high of 1.3493 in the early NA session but failed to push higher and changed its direction in the last hour to erase all of its daily gains. As of writing, the pair was down 0.2% on a daily basis at 1.3433.

Earlier today, Statistics Canada reported that inflation, as measured by the Consumer Price Index, ticked up to 2% on a yearly basis in April and came in line with the market expectation. However, the Bank of Canada's core CPI, which strips volatile energy and food prices, fell to 1.5% and missed the analysts' estimate of 1.8%, suggesting that the BoC is unlikely to continue to hike rates in a soft inflation environment and weighed on the loonie. 

However, following the initial spike in reaction to the data, the pair made a sharp U-turn with the latest trade headlines helping the CAD gather strength. According to the Wall Street Journal, Treasury Secretary Mnuchin said they were close to an understanding with Mexico and Canada on resolving steel and aluminum tariffs. 

On the other hand, several news outlets reported that the Trump administration was planning to delay tariffs on European car imports to help the risk appetite return to markets and hurt the demand for the safer greenback. The US Dollar Index, which rose to 97.70 earlier in the session, erased its gains and turned flat near 97.50. Today's data from the U.S. showed that retail sales and industrial production both declined in April but was largely ignored by the markets.

On Thursday, manufacturing shipments and ADP employment change data from Canada will be looked upon for fresh impetus. The U.S. economic docket will feature weekly jobless claims and housing starts figures.

Technical levels to watch for

The pair could face the first hurdle at 1.3500 (psychological level) ahead of 1.3520 (Apr. 24 high) and 1.3600 (Dec. 21, 2018, high). On the downside, supports are located at 1.3425 (daily low), 1.3400 (50-DMA) and 1.3345 (Apr. 23 low).

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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD retreats on the hawkish Fed cut

EUR/USD is trading closer to 1.10 after the Fed cut rates but signaled no further rate reductions. The bank acknowledged the strong labor market and robust consumption. However, it is worried about investment.


GBP/USD: Rising wedge at the top inflates downside risk

GBP/USD portrays a short-term rising wedge bearish formation while trading near 1.2475 during the Asian session on Thursday. One-week-old rising wedge surrounding monthly tops questions buyers.


USD/JPY pops 20 pips on the as expected Fed

USD/JPY is currently trading at 108.32 following the FOMC, travelling between 108.08 and 108.33 but is virtually flat on the day as the Fed lowered rats as expected by 25 basis points.


Gold drops on strength in the Greenback following a dubious Fed rate cut

Gold prices have dropped on the Federal Reserve decision whereby no real assurance of more cuts down the line were presented. However, the door has been left open which limits the downside potential in this move.

Gold News

Bank of Japan Rate Decision Preview: Do not expect the unexpected

The BOJ is predicted to leave its base rate unchanged on Thursday just hours after the Fed cut the fed funds rate for the second time and weeks after the ECB restarted it quantitative easing bond purchases.

Read more