- A robust US jobs report supports bullish sentiment for the greenback, suggesting a potential pause in Federal Reserve’s tightening cycle is less likely.
- Progress in US debt ceiling negotiations drives positive sentiment, with an agreement anticipated within the week to prevent potential default.
- Canadian housing data disappoints as the New Housing Price Index contracts in April, adding to downside pressures for CAD.
USD/CAD rises sharply and reclaims the 1.3500 figure after hitting a daily low of 1.3442. US political issues regarding the debt ceiling had taken center stage, and progress on the theme triggered an upbeat sentiment. Additionally, a solid US jobs report could deter the US Federal Reserve (Fed) from pausing its tightening cycle. At the time of writing, the USD/CAD is trading at 1.3516.
Solid US data and positive sentiment drive USD/CAD, overcoming Canadian housing market headwinds
Fundamental news from the United States (US) bolstered the appetite for the greenback. A goodish US jobs report showed the tight labor market, with Initial Jobless Claims rising below estimates. Meanwhile, the Philadelphia Fed Manufacturing production for May was negative, though it showed some improvement amidst several headwinds like sticky inflation and higher interest rates. Given the backdrop, it might deter Federal Reserve officials from pausing due to the tightness of the labor market.
Meanwhile, US equities got bid as negotiations about an increase of the US debt ceiling. Recent remarks from House Speaker Kevin McCarthy underlined the urgency for an agreement to be finalized this week and for Congress to vote next week ahead of the US default deadline.
Of late, remarks from US Senate Majority Leader Schumer commented that debt limit talks are making progress. Biden’s economic adviser Lael Brainard said that Congress’s most significant risk is failing to prevent a default.
On the Canadian front, housing data pointed to further deterioration. The New Housing Price Index for April plunged -0.1% MoM, below the prior’s month report, and annually based, dropped -0.2%, below March’s 0.2% gain.
On the central bank note, Federal Reserve officials sounded hawkish, with Dallas Fed President Lorie Logan saying that data this time does not support skipping rate hikes at the next meeting, adding that the Fed has not made the progress we need on inflation.
Bank of Canada’s Governor Tiff Macklem and Deputy Governor Rogers said financial institutions should adjust to higher rates. Macklem added that April CPI data was stronger than expected and economic data will guide June’s rate decision.
USD/CAD Technical Level
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
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.