- US bond yields climb amid debt ceiling uncertainty, with the 10-year rate reaching 3.789%, a high since the Silicon Valley Bank collapse.
- US economy displays recovery signs with lower-than-expected jobless claims and an upwardly revised Q1 GDP, while the Fed hints at a pause in rate hikes.
- Canadian Manufacturing Sales declined by 0.2% in April, highlighting the economic contrast between the US and Canada.
USD/CAD reclaims the 1.3600 figure after hitting a daily low of 1.3586, climbs for two consecutive days toward the April 28 swing high at 1.3667, on mixed market sentiment, as the Nasdaq rises. The financial markets narrative remains the same, with Republicans and Democrats unable to reach an agreement despite Fitch Ratings threatening to review the US qualification. The USD-CAD is trading at 1.3639.
US economy bounces back amidst debt ceiling stalemate; Canadian Manufacturing Sales stumble
US House Speaker Kevin McCarthy said that both sides made some progress but that “There are still outstanding issues. I’ve directed our team to work 24/7 to solve this problem.” Uncertainty around the negotiations keeps US Treasury bond yields climbing, with the US 10-year benchmark note rate at 3.789%, its highest level since the Silicon Valley Bank (SVB) collapse on March 10.
Meanwhile, US Treasury Secretary Janet Yellen continued her campaign putting pressure on the US Congress, stating the US would run out of cash by June 1. Some consequences of the political drama in Washington triggered a reaction by Fitch Rating, warning that the US AAA rating is under threat.
Consequently, the US Dollar Index (DXY), which measures the performance of a basket of six currencies vs. the greenback, trades at 104.266, gains 0.36%. Therefore, the USD/CAD climbs on a strong US Dollar (USD), and weaker oil prices, as WTI tmbles more than 3%.
Aside from geopolitical jittery, US economic data shows the economy regaining momentum, as the Initial Jobless Claims for the week ending on May 20 expanded by 229K below expectations of 245K, as revealed by the US Bureau of Labor Statistics (BLS). In another report, the second estimate of the US Gross Domestic Product (GDP) for Q1 was revised from 1.1% to 1.3%.
On Wednesday, the US Federal Reserve revealed the May meeting minutes, which showed that the US central bank is open to pause rates at the upcoming meetings, though emphasized that some flexibility is needed in the case of needing higher rates. Furthermore, participants commented the current monetary policy is impacting the economy as bank credit tightened, that no rate cuts are expected in 2023, and that the Fed will be data-dependent.
On the Canadian front, Manufacturing Sales plunged -0.2% in April, below March’s 0.7% increase.
USD/CAD Technical Levels
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
AUD/USD: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Ethena Labs launches new UStb stablecoin backed by BlackRock's BUIDL token
Ethena Labs announced on Thursday that it has released a new stablecoin product, UStb. The new stablecoin will be fully collateralized by BlackRock's USD Institutional Digital Liquidity Fund and function similarly to a traditional stablecoin.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.