- USD/CAD has retreated from 1.3300 as BoC is expected to raise interest rates to 5%.
- Upbeat Canada’s labor market data has propelled hopes of one more interest rate hike from the BoC.
- Going forward, US CPI data will be keenly watched.
The USD/CAD pair has attracted offers after a brisk pullback move to near the round-level resistance of 1.3300 in the European session. The Loonie asset is under pressure as the recovery move in the US Dollar Index (DXY) is short-lived and the Canadian Dollar is gaining strength amid expectations of a continuation of the rate-hiking spell by the Bank of Canada (BoC).
S&P500 futures have extended losses in London, following negative cues sensed on Friday after upbeat wages data. US equities faced a sell-off as solid wage figures drummed one more interest rate hike from the Federal Reserve (Fed) in July. The overall market mood is quite risk-averse as fears of a recession in the United States have elevated.
The US Dollar Index (DXY) has retreated after facing stiff barriers near 102.50. Further pressure would drag the USD Index to near the immediate support of 102.20. After US Nonfarm Payrolls (NFP) data, investors have shifted their focus to the Consumer Price Index (CPI) data, which will release on Wednesday at 12:30 GMT.
As per the consensus, monthly headline CPI elevated at a higher pace of 0.3% vs. the prior pace of 0.1%. Annualized headline inflation is expected to soften to 3.1% against the former release of 4.0%.
Meanwhile, the Canadian Dollar will dance to the tune of the interest rate decision by the Bank of Canada (BoC). BoC Governor Tiff Macklem is expected to push interest rates higher to 5% as labor market data has turned out extremely persistent. Investors should note that the BoC has already raised interest rates to 4.75%.
Statistics Canada reported fresh additions of 59.9K employees vs. the estimates of 20K. In May Canadian labor force witnessed a lay-off of 17.3K employees. The Unemployment Rate increased to 5.4% vs. the estimates of 5.3% and the prior release of 5.2%. Investors should note that BoC Governor Tiff Macklem has already raised interest rates to 4.75%.
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 extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
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.