USD/CAD is supported by positive data and rising oil

Key Movers

The US Dollar Index (DXY) climbed from 103.183 to 103.427 today following the release of key economic figures. The fourth-quarter GDP data showed an increase at an annual rate of 3.3%, lower than the previous quarter's 4.9% but higher than the forecasted 2.3%. According to the U.S. Bureau of Economic Analysis, US Durable Goods remained unchanged at 295.6 billion in December, compared to the previous month's 5.5% increase. The Initial Jobless Claims for the week ending on January 20th came in at 214,000, up by 25,000 from the revised level of 189,000 the week prior. Currently, the market reflects a nearly 97% probability that the Federal Reserve will maintain interest rates at 5.5% next week, with a 46% chance of rates dropping by 0.25% in March.

The euro declined from 1.08983 to 1.08334 against the US dollar this morning as the European Central Bank (ECB) decided to maintain its policy rate at 4.5%. The ECB Governing Council explained that the decision to keep key interest rates unchanged was based on the medium-term inflation outlook, which indicated a downward trend. This confirmed the effectiveness of the ECB's strategy to curb inflation by keeping rates elevated. The ECB remains dedicated to achieving its target inflation rate of 2%.

After the release of significant US economic data, the pound dropped to 1.27011 today. With the US data showing an expanding US economy at an annual rate of 3.3% in the fourth quarter, the pound couldn’t keep up with the USDs strength. The Bank of England (BoE) is expected to maintain interest rates at 5.25% in its meeting on February 1.