USD/CAD slides amid Canadian inflation data
Tuesday 16 May, 2023
Daily Currency UpdateThe USD/CAD pair is down today after the release of hot inflation data out of Canada. Year-over-year inflation is at 4.4%, marketing the first move higher in annual inflation since June of 2022. This could be an indicator that the Bank of Canada (BoC) may need to push rates a bit higher, whereas the Fed seems to be moving more towards pumping the brakes on rate hikes. West Texas Intermediate (WTI) crude oil is up today by over half a percent at 71.61 a barrel, lending strength to the commodity-linked Loonie.
Key MoversUS data releases showed a lower-than-expected growth in retail sales this month at 0.4%, this is half of the expected 0.8% growth by analysts. This core retail sales data excludes automobiles; however, auto sales also came in below market expectations at 0.4% versus the anticipated 0.5%. These lower sales numbers could be a potential indicator that the Federal Reserve will maintain its more dovish stance and ease off on interest rate hikes during their next meeting. The dollar index (DXY) currently sits at the 102.52 level, still in line with the growth seen over the last several days.
Reports out of the UK showed a higher-than-expected Claimant Count Change which totals the number of people claiming unemployment benefits. This release comes alongside the highest unemployment rate since January of 2022 at 3.9%. This pairing of unfavorable data indicates a weakening economy as unemployment rates rise.
The Eurozone reported GDP growth in-line with market expectations with a 0.1% increase. The German Zentrum für Europäische Wirtschaftsforschung (ZEW) Indicator of Economic Sentiment was much lower than market expectations at 14.8 points, down 10.7 points from the last release. The ZEW surveys German investors and analysts to predict confidence in the Eurozone economy, this lower reading depicts a declining confidence in the European economy.
- EUR/CAD: 1.4587 - 1.4678 ▼
- GBP/CAD: 1.6775 - 1.6885 ▼
- AUD/CAD: 0.8954 - 0.9033 ▼
- USD/CAD: 1.3407 - 1.3494 ▼