Canadian Dollar dives as US Dollar rallies after strong US CPI data.
Bank of Canada keeps rates on hold but hints at rate cut, probably in June.
Bets on Fed cut in June drop from 50% to 17% following US inflation figures.
The Canadian Dollar (CAD) has tumbled nearly 0.8% in Wednesday’s early North American session to reach the lowest levels this year so far. US Consumer Prices Index (CPI) figures for March confirmed that inflation remains stubbornly high, sending US Treasury yields and the US Dollar to fresh multi-month highs.
Price pressure remains sticky at levels well above the Federal Reserve’s (Fed) 2% core inflation target as last week’s strong employment and steady price growth data suggested. These figures back the Fed’s hawkish side and practically ditch its plan for three rate cuts, which was devised in January. This is expected to underpin the US Dollar in the near term.
In Canada, the Bank of Canada (BoC) kept interest rates unchanged, as widely expected, but noted a downward trend in core inflation. The market has observed those comments as a hint toward a rate cut in June, which has increased downside pressure on the CAD.
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