USD/CAD slides from weekly highs

The USD/CAD pair extends its decline from weekly highs around 1.3220s reached on Thursday, spurred by elevated US PPI data, which showed that inflation is far from peaking, triggering an uptick in expectations of a Fed 100 bps hike, which later eased as Fed policymakers pushed back against those assumptions.

The USD/CAD is exchanging hands at 1.3029, dropping almost 0.70%, on a day where the USD/CAD started trading around 1.3110s, near the daily highs, and plunged on a soft US dollar, hitting a daily low at around 1.3013, early in the North American session.


Global equities portray an upbeat market mood. Nevertheless, the market stays the same, with high inflation, worldwide central banks hiking rates, and recession fears lingering in traders’ minds. The US dollar remains heavy, down by almost 0.50%, as portrayed by the US Dollar Index, at 108.111. in the commodities space, US crude oil, namely WTI, rises 1.49%, at $97.90 PBD, a headwind for the USD/CAD, due to the close correlation between the Canadian dollar and oil prices.

On Friday, the US Department of Commerce reported that US Retail Sales rose by 1% YoY, beating the estimations of 0.8%, and also topped May’s dismal reading of -0.3%, a signal of consumers’ resilience and strength, despite Fed hikes.

The University of Michigan Consumer Sentiment at 51.1 vs. 49.9 estimated, exceeding forecasts, while inflation expectations tempered, with consumers seeing inflation at 2.8% over a 5-year horizon, lower than 3.1% in June.

On the Canadian side, the Friday docket was empty. However, the Bank of Canada’s decision to hike rates by 100 bps caught the markets by surprise and capped any further gains by the US dollar.