Loonie struggles to find a ground
Daily Currency Update
USD/CAD edged slightly higher on Wednesday, although the pair struggles to take full advantage of the move and remained well under the 1.3400 levels. Though the Loonie did show some strength in the early trading sessions against the greenback on Wednesday. The yield on benchmark 10-year government bonds slipped 3.4 basis points to 2.922%. Crude oil was playing defense to save its gains as markets are awaiting the upcoming key oil inventory data. Crude oil inventories have fallen below the five-year average for the first time this year. Oil was last seen trading at 72.50 levels. This too was seen keeping the Loonie in oscillation. That said, a modest USD strength, acted as a tailwind for USD/CAD.The ambiguity over the US debt limit, along with the Federal Reserve’s not so hawkish outlook, kept a lid on the US bond yields. The benchmark 10-year US Treasury bond yields were down, reaching below 3.5%. The markets are betting on a possible rate cut later this year and a possible pause in the upcoming policy meet. All these factors are holding back the USD bulls and capping gains for the USD/CAD pair.
Key Movers
The sterling climbed up to a five-month high against the euro as markets keep their hopes high for the upcoming Bank of England (BoE) meeting where a further rate increase is expected. There are strong bets on a 25 bps increase by the BoE tomorrow to cool the continuously rising inflation. GBP/USD jumped to a new 1 year high, trading at 1.2675 levels following the US CPI data release.EUR/USD was seen rallying as well following the US CPI data, trading at 1.10050 levels. The euro did lose some ground against the greenback earlier during the European trading session. The final inflation numbers in Germany saw the CPI rising to 7.2% in April, up 0.4% from March. Industrial production in Italy contracted by 0.6% month-over-month in March and 3.2% from a year earlier. The European Central Bank (ECB) still maintains a hawkish view on rate hikes, like other major central banks.
Expected Ranges
- EUR/CAD: 1.4648 - 1.469 ▼
- GBP/CAD: 1.6872 - 1.6914 ▼
- AUD/CAD: 0.9028 - 0.909 ▼
- USD/CAD: 1.3337 - 1.3404 ▲