The Loonie rallied firmly and is extending a new four-week high, expanding its gains for the fifth consecutive day, with investors worried that the Federal Reserve might trigger the US economy into a recession as they tighten monetary policy to abate inflation.
Worldwide equities remain pressured, indicating a diminished market mood. Therefore, demand for the greenback rose due to its safe-haven status. Reflection of that is the US Dollar Index, a basket of the performance of six currencies vs. the buck, advancing 0.15%, sitting at 105.360.
The USD/CAD remains upward pressured for the reason mentioned above. The US economic calendar reported prices paid by producers, which rose by 10.8% YoY, in line with estimates, triggering no action as traders’ focus is on the Fed. The CME Fed Watch Tool reports that investors have priced in a 93.2% chance of a US Federal Reserve 0.75% rate hike in the June meeting.
In the meantime, oil prices drop for the first time in the week. Western Texas Intermediate (WTI), the US crude oil benchmark, falls more than 1%, exchanging hands at $119.64 per barrel.
Looking forward, the Canadian economic calendar will feature Housing Starts on Wednesday, estimated at 252.6K. On the US front, May’s Retail Sales are estimated to grow by 0.2% MoM, alongside the highlight of the week, the US Federal Reserve Open Market Committee (FOMC) interest rates decision.
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