Loonie dips amid strong housing data

Key Movers

The US Dollar Index (DXY) was flat this morning after making gains of over 1% yesterday. The February Producer Price Index (PPI) data was released at higher-than-expected levels with the final demand rising to 0.6%, up from 0.3% in January. The advancing PPI numbers brought inflation worries back to the forefront as we approach the Federal Reserve announcement set to be released on Wednesday. Markets have already priced in an unchanged interest rate but have been looking at a possible rate cut in May. As recently as a month ago, there was as much as a 40% chance of that happening. Markets are now pricing in a 90% chance the rates will remain where they are even at the next announcement. The University of Michigan Consumer Sentiment data is set to be released this morning and is expected to remain stable at a reading of 76.9 for March.

The euro held steady after losing ground against the USD yesterday. The inflation numbers in France released overnight proved to be the most impactful data point for the Eurozone. Prices in Europe’s second biggest economy were up 0.8% last month, in line with the consensus expectations. As a result, the Financial Times Stock Exchange (FTSE) was up, bolstering the euro further.