USD/CAD holds above one month high
Thursday 27 April, 2023
Daily Currency UpdateDespite making a strong recovery from its two-month low of 1.3300, the USD/CAD pair has experienced a slight decline during the first half of trading today. However, the pair manages to maintain a position above the 1.3600 mark and is currently situated just above a nearly one-month high reached on Wednesday. The commodity-linked Loonie finds support from a slight improvement in crude oil prices, creating a challenge for the USD/CAD which is experiencing limited price action due to a subdued US dollar. Oil prices, which are trading near 74.750, could be the result of technical buying. This follows a recent drop to a monthly low triggered by concerns of an impending recession and an increase in Russian oil exports, which negated the positive effects of the Organization of the Petroleum Exporting Countries production cuts.
Key MoversThe US dollar reversed its intraday losses with the dollar index (DXY) moving from 101.300 to surge above 101.600. This climb is largely because of today's macroeconomic data release which showed slower economic growth than expected in the first quarter, however, with inflationary pressures moving higher there is support for the Federal Reserve to hike interest rates further. Data released today by the US Bureau of Economic Analysis revealed the US economy grew at an annualized rate of 1.1% in the first quarter of 2023. This marks a decline from the 2.6% expansion recorded in the fourth quarter of 2022 and falls short of the market expectation of a 2% growth rate. Further information from the report shows that the GDP price index rose to 4% in the same period, exceeding market expectations of 3.8%. Additionally, the Personal Consumption Expenditures Prices increased quarterly from 3.7% to 4.2%. Furthermore, data released by the US Department of Labor (DOL), showed 230,000 initial jobless claims in the week that ended on April 22nd. This is a decrease from the previous week's revised figure of 246,000 and is lower than the market forecast of 248,000. Today's reading marks the lowest level in three weeks.
The EUR fell against the dollar following the release of significant US macroeconomic data. Despite the recent volatility triggered by concerns of a recession and a banking crisis reminiscent of past events in the US, the EUR/USD pair has managed to stabilize above 1.1000. Data released today for the Eurozone showed a modest improvement in consumer confidence with today's reading coming in line with market expectations of -17.5 from the previous print of -19.1.
The sterling turns bearish and reverses its daily gains as it hovers around the 1.2450 level against the greenback amid a resurgence in the strength of the US dollar. Despite the US economy's weak growth in the first quarter due to the temporary negative impact of inventories, the market appears to be indifferent to the news. No UK data is scheduled for release today.
- EUR/CAD: 1.4988 - 1.5074 ▼
- GBP/CAD: 1.6961 - 1.7016 ▼
- AUD/CAD: 0.8991 - 0.9032 ▲
- USD/CAD: 1.3601 - 1.3648 ▼