- USD/CAD gains ground as investors turned back to the US Dollar.
- WTI price could rise on the escalated situation in the Red Sea; supporting CAD.
- BoC’s Business Outlook Survey Results showed that inflation could persist above the 2.0% target.
USD/CAD moves on a winning streak for the fourth consecutive session, with positive market sentiment turning into risk aversion. This shift is attributed to the heightened geopolitical situation, specifically the reported missile launched by the Islamic Revolutionary Guard Corps (IRGC) targeting espionage centers and gatherings of anti-Iranian terrorist groups in northern Iraq near the US Consulate in Erbil. As a result, the USD/CAD pair trades higher around 1.3480 during the early European hours on Tuesday.
West Texas Intermediate (WTI) price struggles to retrace its recent losses, trading near $72.50 per barrel at the time of writing. The reported attacks by the IRGC, coinciding with concerns over Israel's offensive in the Gaza Strip and an escalation in the Red Sea by Iran-backed Houthi rebels, have contributed to supporting Crude oil prices. This development might have limited the losses of the Canadian Dollar (CAD) against the US Dollar (USD).
The Bank of Canada's (BoC) Business Outlook Survey Results on Monday indicated that softer demand and renewed competitive pressures are gradually exerting downward pressure on growth in output prices. While concerns about labor shortages are diminishing, wage growth is anticipated to ease only gradually. Due to this gradual easing, businesses expect inflation to persist above the Bank of Canada's 2.0% target for an extended period.
Statistics Canada is set to publish the Consumer Price Index (CPI) for December. The annual increase is expected to be 3.4%, slightly higher than the 3.1% recorded in November. On a monthly basis, the index is anticipated to decline by 0.3%, following a 0.1% increase in the previous month. These figures will provide insights into the country's inflationary trends and could impact market sentiments and BoC’s policy considerations.
The US Dollar Index (DXY) experiences upward support due to risk aversion, further reinforced by positive movements in US Treasury yields. Market participants will keenly observe the US NY Empire State Manufacturing Index for January and a speech by Federal Reserve official Christopher J. Waller scheduled for later on Tuesday.
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 climbs to fresh monthly high above 1.0800
EUR/USD gathered bullish momentum and advanced to its highest level in a month above 1.0800 in the American session on Tuesday. The renewed selling pressure surrounding the US Dollar ahead of Wednesday's key inflation data provides a boost to the pair.
GBP/USD rises above 1.2550 on renewed USD weakness
After falling toward 1.2500 in the early American session, GBP/USD regained its traction and turned positive on the day above 1.2550. The US Dollar struggles to find demand following the producer inflation data and allows the pair to stretch higher.
Gold extends daily recovery toward $2,350
Following Monday's decline, Gold stages a rebound toward $2,350 on Tuesday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.5% after April producer inflation data, allowing XAU/USD to hold its ground.
Ethereum knocking at support’s door
Crypto market capitalisation rose 0.8% over the past 24 hours to 2.2 trillion, but growth exceeded 2% for most of the period. However, it dipped at the start of active European trading, temporarily returning to levels of a day ago.
PPI surprises on the upside, but CPI may not follow suit
US producer price data for April surprised on the upside, suggesting that inflation pressure at the start of the inflation pipeline could be building once again. Final demand PPI rose to 2.2% from 1.8%.