- USD/CAD is marching towards 1.3800 as the market mood has soured amid soaring yields.
- Fed’s Beige Book has indicated moderation of labour demand due to anticipation of economic slowdown.
- Oil prices have recovered firmly despite an addition in global oil supply from US SPR.
The USD/CAD pair has picked bids around 1.3760 and aims to recapture the critical hurdle of 1.3800. The greenback bulls have been underpinned as the market mood has soured further. S&P500 futures have extended their losses after a weak Wednesday session.
The US dollar index (DXY) has climbed to Wednesday’s high at around 113.10 in the early trade and is expected to surpass the same with less effort. Also, the 10-year US Treasury yields have jumped to 4.15% amid soaring bets for a bigger rate hike by the Federal Reserve (Fed).
Fresh demand was witnessed in the mighty DXY after the Fed’s Beige Book cited risks of elevating inflation and weak domestic demand due to higher interest rates, supply chain disruption, and mounting price pressures. Sales for automobiles have turned sluggish amid higher vehicle prices and higher interest obligations upon the same.
Adding to that, economic activities have remained flat in major districts and labor demand has moderated as firms have ditched the recruitment process in anticipation of an economic slowdown.
Meanwhile, Chicago Fed President Charles Evans cited that the US central bank “Needs to make sure inflation pressures don't broaden further,” He believes that the Fed should have started tightening the monetary policy six months earlier than their first rate hike in March 2022 post-pandemic.
This week, Canada’s inflation data remained in the spotlight. The headline Consumer Price Index (CPI) escalated to 6.9% against projections of 6.8%. While the core CPI soared to 6.0% from the expectations of 5.6%.
In response to the higher-than-projected inflation rate, Analysts at CIBC believe the Bank of Canada (BOC) will need to hike rates by 75 basis points (bps) next week, against the 50 bps previously anticipated.
On the oil front, oil prices have rebounded firmly to near $85.00 despite the announcement of oil release by US President Joe Biden. A release of 15 million barrels of oil to balance the demand-supply mechanism from the US Strategic Petroleum Reserve (SPR) may conclude the rally sooner.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.