USD/CAD slips amid rebounding oil prices

Key Movers

he US dollar index (DXY) traded below 103.3 after the imposition of tariffs on Tin Mil Steel from China, Germany, and Canada by the US today. The greenback is retracting following the release of the US Federal Reserve meeting minutes detailing the latest interest-rate hike. The unexpected note is that several members of the Federal Open Market Committee (FOMC) still expect upward inflation risk and advocate for additional measures. Data released today by the US Department of Labor for the week ending on August 12th saw 239,000 initial jobless claims. This figure follows the previous week's count of 250,000 and was slightly below the market projection of 240,000. Additional data showed the Federal Reserve Bank of Philadelphia's Manufacturing Survey experienced a significant improvement, rising from -13.5 in July to 12. This reading marked the first positive reading in a year and surpassed the market forecast of -10 by a considerable margin.

The euro continued its upward momentum against the USD, surpassing the 1.0900 mark during the early North American Session today. In the Eurozone, investors hold differing about the possibility of the European Central Bank (ECB) implementing another rate hike, given the deteriorating economic situation. Recent data revealed that core inflation in the euro area did not decelerate as initially predicted for July. The ECB abandoned the guidance towards continuous increases in borrowing costs and ECB President Christine Lagarde mentioned that the September rate decision could result in either a pause or an increase.

The pound traded above 1.275, showing a slight improvement from its one-month low of 1.268 on August 10th. The positive momentum was influenced by the recent Consumer Price Index (CPI) report, which bolstered hawkish opinions within the Bank of England's (BoE) Monetary Policy Committee. The CPI report indicated a 6.8% increase in consumer prices in the UK for July, aligning with market expectations and down from the 7.9% recorded in the previous month. Despite this, the core inflation metric remained steady at 6.9%, prompting concerns about persistent inflation in critical sectors of the economy. This data further supported earlier releases that showcased record wage growth, reinforcing the likelihood that the BoE might maintain higher interest rates for an extended period.