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USD/CAD falls to 1.3500 on firmer Oil prices, BoC apprehensions ahead of US inflation, and Fed Minutes
After halting a four-day uptrend at the open, USD/CAD remains under pressure near the intraday low. China-Taiwan tension bolsters geopolitical concerns and enables the Oil price to remain firm. The BoC is likely to maintain its status quo, but concerns about future moves and conflicting sentiments about the Fed motivate Loonie pair buyers. US CPI and BoC Governor Macklem's speech will also be crucial for direction clarity.
The USD/CAD maintains losses close to 1.3500, snapping a four-day winning trend, as traders gird for key data/events during the Easter Monday holidays on major bourses. However, the recent decline in the Loonie-U.S. dollar exchange rate may be attributable to the rise in the price of Canada's primary export, WTI petroleum oil. However, the Bank of Canada's (BoC) dovish bias, in contrast to the recent surge in hawkish Fed wagers, poses a challenge to pair sellers.
After increasing for three consecutive weeks, WTI crude oil prices post intraday gains of 0.61 % near $80.00. Recent gains in the price of black gold may be attributable to geopolitical concerns encircling China and Taiwan. In addition to the OPEC+ supply cut and the weakening US dollar, the energy benchmark is being supported by the OPEC+ supply cut and the weakening US dollar.
However, the US Dollar Index (DXY) has declined for three consecutive weeks and is currently under pressure near 102.000.
Fears of higher Fed rates versus no action from the Bank of Canada (BoC) gained momentum after the ebullient US Jobs report compared to the lack of significant positives in the March Canadian jobs report.
As a consequence, the CME's FedWatch Tool indicates 69% likelihood of a 0.25 basis point rate increase in May, compared to 55% prior to the US jobs report.
Regarding the data, Canada's headline Net Change in Employment increased to 34.7K in March from 21.8K in February, compared to the market consensus of 12K, while the Unemployment Rate came in at 5% versus the analysts' estimate of 5.0%. Notably, the Participation Rate decreased to 65.6% during the specified month from the expected and previous rate of 65.7%. In addition, the Average Hourly Wages decreased to 5.2% year-over-year in March from 5.4% in February.
In contrast, the US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) increased by 236K in March, the lowest increase since January 2021 (considering revisions), compared to 240K anticipated and 326K previously. In addition, the unemployment rate decreased from 3.6% to 3.5%, while the labor force participation rate increased from 62.6% to 62.6%. According to the Average Hourly Earnings, annual wage inflation decreased from 4.6% to 4.2%, below market expectations of 4.3%.
US stock futures closed higher, but yields remain under pressure advance of the crucial BoC monetary policy meeting, US inflation, and Fed Minutes. Given the dovish concerns from the Bank of Canada (BoC) and the likely hawkish comments in the FOMC Minutes, the USD/CAD may see further gains, barring any surprises.
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