USD/CAD dips further amid a decline in oil demand

Key Movers

The US Dollar Index (DXY) held steady this morning at 105.5 as investors gauged the Federal Reserve’s monetary policy outlook. Market opinions diverged on whether US interest rates had already reached their peak. Weekly jobless claims data revealed a 3,000 claims drop to 217,000 jobless claims. This beat the expected 218,000 claims and made a slight decrease from the revised 220,000 in the previous period.

The euro regained stability against the US dollar, pushing the EUR/USD pair to break through the significant barrier of 1.0700. Luis de Guindos Vice President of the European Central Bank (ECB) highlighted the likelihood of a modest contraction or stagnation in the eurozone’s economy in the fourth quarter. He underscored the ECB’s commitment to a data-dependent approach. Meanwhile, policymaker Robert Holzmann emphasized the importance of staying vigilant about inflation and being prepared to raise rates as needed.

The pound slipped below the 1.23 mark despite recently achieving its most significant weekly gain in nearly four months. The drop followed comments from the Bank of England Chief Economist Huw Pill, when he suggested that rate cuts could be considered from the middle of the next year. Currently, investors are estimating a probability of over 50% for unchanged rates until June 2024.