CAD hurt by Fed rate hike
Daily Currency Update
The USD/CAD pair found support today after falling near the 1.3160 levels during the UK trading session. Following the Federal Reserve’s less hawkish rate decision yesterday, the CAD is expected to continue moving downward. With the USD strength in the last day, the CAD was able to remain somewhat steady largely due to optimistic oil prices. West Texas Intermediate (WTI) oil commodities are strengthening towards the vital resistance level of $80.00 as stakeholders anticipate that July’s interest rate hike by the Fed is the final move in a series of rate hikes recently. Canadian inflation rates have been dropping following the last rate hike by the Bank of Canada (BoC). Impact with the last rate hike and oil price possible reach to 100 the cad looks stronger in market.Key Movers
The USD gathers strength today as stakeholders react to the healthy macroeconomic data publications from the US and the expected 0.25 basis point (bps) rate hike from the Federal Reserve yesterday. The US dollar index (DXY) changed direction to the positive side on the day near 101.50 after dipping to a weekly low of 100.55 during the European trading session. During the Fed’s policy meeting yesterday, Powell held back from verifying any more rates climb this year and said that every policy meeting will be live. "If we see inflation coming down credibly, we can move down to a neutral level and then below neutral at some point," Powell told reporters. According to the CME Group Fed Watch Tool, the likelihood of one more rate increase this year is back above 30%. The real Gross Domestic Product (GDP) of the US extended at an annualized rate of 2.4% in the 2nd quarter. This reading followed the 2% increase noted in the 1st quarter and beat the market expectation of a 1.8% increase. In other data releases, Durable Goods Orders jumped 4.7% monthly to reach $302.5 billion. The US Department of Labor (DOL) also released the initial jobless claims report, noting that claims fell by 7,000 to 221,000 in the week ending on July 22.The EUR/USD pair is under hefty selling pressure today, trading near the 1.1000 level. The EUR/USD was weakened by European Central Bank’s (ECB) President Christine Lagarde’s dovish comments. Lagarde implied a feasible rate hike silence in September. With a rising USD the pair slips.
The GBP continues to soar on its two-day winning streak and hits a weekly high of 1.2976. Consumer Price Index (CPI) data tempered to 7.9% in the UK in June while core CPI, which eliminates unstable food and energy prices, collapsed to 6.9%. While moving in the right direction, these decreases cannot yet allow the Bank of England (BoE) to triumph over inflation. While inflation softened in June, BoE policymakers are still expected to implement a rate hike in August. An opinion poll this week noted that interest rates in the UK are expected to reach a possible climax around 5.75%.
Expected Ranges
- EUR/CAD: 0.897 - 0.9101 ▲
- GBP/CAD: 0.5845 - 0.5905 ▲
- AUD/CAD: 1.1137 - 1.1272 ▲
- USD/CAD: 0.7555 - 0.7598 ▲