USD/CAD dips under selling pressure
Daily Currency Update
USD/CAD comes under selling pressure as it falls near the 1.32520 mark. The CAD is expected to experience some movement following the publication of Canada's monthly Manufacturing Sales data for April. This data is projected to show a contraction of 0.2% compared to a previous expansion of 0.7%. Expectations suggest that the Bank of Canada's (BoC) decision to raise interest rates has led companies to operate below their maximum capacity, resulting in a decrease in overall factory activity. Oil prices have rebounded following a correction, approaching the vicinity of $68.00, coinciding with the dollar index (DXY) encountering selling pressure.Key Movers
The DXY has encountered significant selling pressure, causing a retreat from 103.28 and hindering bullish momentum. Despite the resilience observed in household demand, the greenback has experienced a sharp decline as it falls below 102.80. Federal Reserve Chair, Jerome Powell announced yesterday that there would be two additional interest rate hikes this year. Data released today by the US Department of Labor indicated that there were 262,000 initial jobless claims for the week ending on June 10. This figure is consistent with the previous week's revised number of 262,000 and exceeds expectations of 249,000. This is also the highest recorded value since October 2021. US Retail Sales were also released with a 0.3% growth in May, reaching $686.1 billion, well above expectations of a 0.1% decline. Recent results from the Federal Reserve Bank of Philadelphia's Manufacturing Survey revealed a decrease in the diffusion index for current general activity, dropping to -13.7 from -10.4 in May. Despite the decline, the index exceeded market expectations, which had anticipated a reading of -14. Today's reading marks the 10th consecutive negative occurrence.EUR/USD is consolidating gains below the 1.0900 level and finding support in the decline of the USD due to mixed US economic data. European Central Bank (ECB) President, Christine Lagarde has expressed support for an additional rate hike in July, rejecting the notion of pausing the central bank's tightening efforts. This comes in the wake of the bank's decision to raise the main financing rate to 4.0%. The central bank foresees prolonged high inflation and aims to tackle it by prioritizing maintenance of sufficiently restrictive interest rates.
GBP/USD is climbing above 1.27300 as the USD weakens due to a combination of conflicting US Jobless Claims and Retail Sales data. Anticipated policy divergence between the Federal Reserve and the Bank of England (BoE) is expected to propel the pair higher. While the US avoided an additional interest rate hike by the Fed, thanks to notable inflation moderation, the BoE will continue interest rate hikes due to the substantially higher inflation in the UK relative to other developed economies.
Expected Ranges
- EUR/CAD: 1.4412 - 1.4497 ▲
- GBP/CAD: 1.6851 - 1.6897 ▲
- AUD/CAD: 0.9022 - 0.9096 ▲
- USD/CAD: 1.3242 - 1.3354 ▼