CAD continues to make gains on USD

Key Movers

The market’s reaction to recent positive inflation data saw the dollar index (DXY) down 0.48% to 103.126. Inflation in the US declined to 4% year-over-year in May from 4.9% in April and slightly below the expected 4.1%. These cooling inflation rates are the lowest annual inflation data the US has seen in 2 years. Core Consumer Price Index (CPI) data edged lower to 5.3% from the expected 5.5%. On a monthly basis, CPI rose 0.1% and Core CPI rose 0.4%. The release of this positive inflation data coupled with the dip in the DXY could indicate that the Federal Reserve may pause its tightening cycle not only tomorrow but potentially also in the July rate decision meeting.

The UK reported positive expected employment data with the claimant count dropping by 13,600, against the market expectations of 21,400. The UK 3-month average earnings index reported a 6.5% growth in earnings, higher than the forecasted 6.1%. Strong labor data out of England indicates the potential for interest rate hikes by the Bank of England (BoE) in an effort to contain unrelenting inflation.

The People’s Bank of China reported 1,360 billion in yuan-denominated loans issued to consumers and businesses in May. This was lower than the forecasted 1540 billion.

The German Zentrum für Europäische Wirtschaftsforschung (ZEW) economic sentiment was released at -8.5 which surpassed expectations of -13.4. Although this sentiment data was better than forecasted, the negative value still indicates that the German economy, the largest economy in the European Union, may not see significant improvements in the second half of the year.