USD/CAD slumps to near 1.3450 as US Dollar weakens on dismal market mood

The USD/CAD pair slides to near 1.3450 in the London session on Thursday as the outlook for risk-perceived assets has turned bullish. The Loonie asset weakens as the US Dollar is facing an intense sell-off despite easing hopes of rate cuts by the Federal Reserve (Fed) before the June monetary policy meeting.

S&P500 futures have posted stellar gains in the European session, portraying cheerful market sentiment. The US Dollar Index, which gauges the Greenback’s value against six rival currencies, refreshes a two-week low near 103.70. 10-year US Treasury yields have dropped to 4.31%.

The US Dollar failed to rebound even though the Federal Open Market Committee (FOMC) minutes for the January policy meeting, released on Wednesday, indicated that policymakers are not interested in reducing interest rates too soon. Most Fed policymakers are still not convinced that inflation will sustainably return to the 2%.

Meanwhile, investors await the preliminary S&P Global PMI data for February, which will be published at 14:45 GMT. The Manufacturing PMI is forecasted to decrease to 50.5 from 50.7 in January. The Services PMI that represents the service sector, which accounts for two-thirds of the United States economy, is expected to release at 52.0, lower than the prior reading of 52.5.

On the Canadian Dollar front, investors await the Retail Sales data for December, which will be published at 13:30 GMT. Investors anticipate monthly Retail Sales rose by 0.8% after contracting 0.2% in November. In the same period, Retail Sales excluding autos are anticipated to have risen by 0.7% against a decline of 0.5%. An upbeat Retail Sales data would push back hopes of rate cuts by the Bank of Canada (BoC).