- The Canadian Dollar held to gains bolstered by market sentiment and a soft US Dollar.
- US cooled on yearly figures, but core CPI rising MoM suggests inflation is stickier than estimates.
- The Federal Funds rates is expected to peak at around 5.0%, according to money market futures.
USD/CAD drops on Tuesday by 0.37% after hitting a daily high of 1.3750 as Wall Street closes. A risk-on impulse weighed on the US Dollar (USD) and favored the Canadian Dollar (CAD), which despite falling oil prices, is clinging to gains. At the time of writing, the USD/CAD is trading at 1.3680.
US February core CPI came above estimates
Wall Street finished Tuesday’s session with 1% and 2.14% gains. Inflation in the United States (US), as reported by the Department of Labor (DoL), was lower than forecasts on annual figures. However, on a monthly basis, the Consumer Price Index (CPI) ticked down from 0.5% to 0.4%, but core CPI rose above estimates of 0.4% at 0.5%.
Recent turmoil in the US banking systems plunged US Treasury bond yields, particularly 2s, which fell 100 bps in two days. However, backstop measures implemented by the US Federal Reserve (Fed) have calmed investors, as shown by the market mood.
Given the backdrop, speculators have begun to price in a less aggressive Fed. The swaps market estimates the Fed would hike 25 basis points at the upcoming March meeting and is seeing rates peaking at the 4.75% - 5.00% range.
Consequently, US Treasury bond yields recovered some ground and underpinned the US Dollar. The US Dollar Index, a measure of the buck’s value vs. a basket of peers, finished the session with minuscule gains of 0.03%, at 103.659, and capped the USD/CAD rally.
Another reason that helped offset the Canadian dollar gains as oil prices collapsed by 4%, as shown by the US crude oil benchmark WTI. WTI finished the session losing 4.30% at $71.44 per barrel.
In later news, a crash between a Russian fighter jet and a US drone caused a dip in US equities, though most indices pared those losses and finished higher.
The lack of data in the Canadian docket kept investors leaning on the US Dollar dynamics, sentiment, and oil prices. On the US front, the economic calendar will feature the Retail Sales, the Producer Price Index, and the New York Empire State Manufacturing Index.
USD/CAD Technical levels
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
AUD/USD hovers around 0.6500 amid light trading, ahead of US GDP
AUD/USD is trading close to 0.6500 in Asian trading on Thursday, lacking a clear directional impetus amid an Anzac Day holiday in Australia. Meanwhile, traders stay cautious due ti risk-aversion and ahead of the key US Q1 GDP release.
USD/JPY finds its highest bids since 1990, near 155.50
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, testing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming Japanese intervention risks. Focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold stays firm amid higher US yields as traders await US GDP data
Gold recovers from recent losses, buoyed by market interest despite a stronger US Dollar and higher US Treasury yields. De-escalation of Middle East tensions contributed to increased market stability, denting the appetite for Gold buying.
Ethereum suffers slight pullback, Hong Kong spot ETH ETFs to begin trading on April 30
Ethereum suffered a brief decline on Wednesday afternoon despite increased accumulation from whales. This follows Ethereum restaking protocol Renzo restaked ETH crashing from its 1:1 peg with ETH and increased activities surrounding spot Ethereum ETFs.
Dow Jones Industrial Average hesitates on Wednesday as markets wait for key US data
The DJIA stumbled on Wednesday, falling from recent highs near 38,550.00 as investors ease off of Tuesday’s risk appetite. The index recovered as US data continues to vex financial markets that remain overwhelmingly focused on rate cuts from the US Fed.