- USD/CAD found support at the psychological level of 1.3600 and rebounded to 1.3615 in early European trading on Thursday.
- The recent slowdown in U.S. inflation and weak retail sales has fueled speculation that the Fed will cut interest rates this year.
- Canadian manufacturing sales data for March was worse than expected, falling 2.1% month-over-month from a 0.9% increase in February.
The USD/CAD pair recovered lost ground near 1.3615 in early European trading on Thursday. A modest rebound in the US dollar (USD) is providing some support for this pair. Investors will focus on U.S. building permits, housing starts, weekly new jobless claims, the Philadelphia Fed's manufacturing index and industrial production later on Thursday.
Minneapolis Fed President Kashkari said Wednesday that the central bank needs to closely monitor the economy to determine whether current policy rates are sufficiently restrained. Earlier this week, Federal Reserve Chairman Jerome Powell said that U.S. inflation may persist more than expected and that the Fed could keep interest rates high for a longer period of time to meet the central bank's 2% target. He pointed out that there is. However, recent weak US inflation data released on Wednesday has increased speculation that the Fed will cut interest rates later this year. This will cause the greenback to rise broadly.
The U.S. Consumer Price Index (CPI) rose 3.4% year-on-year in April, compared with a 3.5% increase in the previous reading. Core CPI inflation, which excludes volatile items such as food and energy, rose 3.6% year-on-year in April, higher than the previous increase of 3.8%. Both numbers were in line with consensus. Monthly headline and core CPI inflation slowed to 0.3% month-over-month in April from 0.4% in March. Additionally, U.S. retail sales rose 0.6% in March to 0% month-on-month in April, worse than the expected 0.4%.
Canadian manufacturing sales data for March was worse than expected, with sales down 2.1 per cent month-on-month, down from February's 0.9 per cent increase, Statistics Canada said Wednesday. The depressed appearance put some pressure on Rooney. Nevertheless, Canada is the largest oil exporter to the United States, so higher oil prices could limit the downside of the commodity-related Canadian dollar (CAD).