USD/CAD Stabilizes Amid Global Risk Appetite

The USD/CAD pair has stabilized just below multi-month highs in the low 1.3000s on Thursday, as a downturn in global macro risk appetite coupled with the strong performance of the safe-haven US dollar offered the pair support.

Both US CPI and PPI data over the past two days showed an (as far as the Fed is concerned, anyway) insufficient moderation of inflationary pressures, it’s not surprising to see the US dollar performing so well.

The data means that the Fed will likely press ahead with its current aggressive tightening plans and, with fears about central bank tightening weighing heavily on global equities, the buck is also deriving support as a safe haven.

A rebound from earlier session lows in crude oil prices has failed to revive the Canadian dollar, which seems likely to continue to trade on the back foot in the run-up to commentary from BoC’s Deputy Governor Tony Gravelle at 1630BST. Gravelle might offer further hints about the extent and timing of the BoC’s monetary tightening plans. Traders should note, however, that the BoC’s hawkish stance has failed to shield the Cad from the US dollar’s advances in recent weeks and probably won’t start this Thursday.