Market news
22.03.2023, 01:14

USD/CAD corrects to near 1.3700 as investors digest hopes of Fed’s 25 bps rate hike

  • USD/CAD has slipped to near 1.3700 as investors have shrugged off fears of a consecutive 25 bps Fed rate hike.
  • Tighter credit, economic contraction, and falling inflation could lead to rate cuts by the Fed this year.
  • Declining Canada’s inflation indicates that the BoC could continue its steady stance on interest rates.

The USD/CAD pair is showing a corrective move after failing to extend its recovery above 1.3740 in the Asian session. On Monday, the Loonie asset showed a solid recovery from 1.3660 after a decline in Canada’s inflation data. Declining Canada’s Consumer Price Index (CPI) data confirmed that the Bank of Canada (BoC) could continue with its unchanged policy stance.

BoC Governor Tiff Macklem is keeping its policy stance steady as he believes that the monetary policy is restrictive enough to achieve price stability. However, BoC Macklem has remained doors open for further hikes if the roadmap of bringing down inflation goes south.

Statistics Canada reported that monthly inflation has accelerated by 0.4%, lower than the consensus of 0.6% and the former release of 0.5%. The headline CPI softened to 5.2% vs. the consensus of 5.4% and the prior release of 5.9%. Apart from them, annual core CPI that doesn’t inculcate oil and food prices dropped to 4.7% from the previous figure of 5.0% but remained higher than the estimates of 4.6%. Overall, the decline in inflation was quite impressive for the BoC, which has already pushed interest rates to 4.5%.

Meanwhile, S&P500 futures are showing a subdued performance after two-day of bulk buying. Investors’ risk appetite is extremely strong as the odds are favoring a consecutive 25 bps rate hike by the Federal Reserve (Fed). The US Dollar Index (DXY) is struggling in maintaining its feet above 103.20 as fears of banking sector turmoil are not faded yet. Also, analysts at UBS are of the view that tighter credit, economic contraction, and falling inflation could lead to rate cuts by the Fed this year.

 

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location