- USD/CAD bounces back from 1.3600 on weak Canadian Manufacturing Sales data.
- The US Dollar faces a sell-off due to an expected decline in the US inflation data.
- Weak US Retail Sales also weighed on the US Dollar.
The USD/CAD pair rebounds sharply after falling to near the round-level support of 1.3600 in Wednesday’s New York session. The Loonie asset recovers as poor Canadian Manufacturing Sales data weakens the Canadian Dollar.
Earlier, the major faced selling pressure as the US Dollar tumbled after the United States (US) Bureau of Labor Statistics (BLS) has reported that the Consumer Price Index (CPI) data for April declines in consistent with estimates. However, the US Dollar has rebounded but is expected to remain on the edge.
The expected decline in the US inflation data has boosted expectations about the Federal Reserve (Fed) to begin reducing interest rates from the September meeting. This has also improved investors risk-appetite. The S&P 500 has posted significant gains at open. 10-year US Treasury yields have plummeted to 4.38%. The US Dollar Index (DXY) reverses to 104.80 after printing a fresh monthly low near 104.50 but is still down.
The US agency reported that annual headline, and core CPI (which strips off volatile food and energy prices) grew in line with estimates of 3.4% and 3.6% respectively. The decline in the inflation data came from lower prices of utility gas services and used cars and trucks. Rentals, transportation and medical services price index continue to gain higher.
Apart from soft US inflation figures, weak monthly Retail Sales data also built pressure on the US Dollar. Monthly Retail Sales were unchanged while investors anticipated an increase by 0.4%.
On the Loonie front, weak monthly Manufacturing Sales data for March has also built pressure on the Canadian Dollar. Statistics Canada reported that Manufacturing Sales contracted at a faster pace of 2.1% while investors forecasted a decline by 1.4%. In February, the economic data rose by 0.9%, upwardly revised from 0.7%.
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.