Daily digest market movers: USD/CAD rallies as US CPI figures cast doubt on Fed cuts
- Canadian Dollar trades at five-month lows, weighed down by strong US CPI data and dovish-tilted BoC statement.
- US headline inflation rises at 0.4% pace in March against market expectations of 0.3% increase. The YoY rate accelerates to 3.5% from 3.2% in February.
- Core CPI shows similar picture with 0.4% monthly increase, above market consensus of 0.3%, with the yearly rate steady at 3.8%.
- Treasury yields for the US 10-year note reach key 4.5% level for first time this year. The 2-year yield jumped 25 basis points to hit levels right below 5%.
- Bets for Fed cut in June have plunged from about 50% to 17% following the release of US COPI data, according to CME Group FedWatch Tool.
- BoC left interest rates unchanged at 5%, but Governor Macklem revealed that the committee discussed the possibility of cutting rates.
- Later on Wednesday, the minutes of the last Fed meeting will be observed under a new perspective following March’s inflation data.
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