Daily digest market movers: USD/CAD keeps marching higher as Fed cut hopes wane
- Canadian Dollar drops to fresh five-month lows on Thursday, on track to its worst weekly performance since November.
- US PPI slowed down to 0.2% in March, from 0.6% in February, although the yearly rate bounced up to 2.1% from 1.6% in the previous month. Core PPI accelerated to a 2.4% yearly rate from 2.1% in February, above expectations of a 2.3% reading.
- On Wednesday, US CPI inflation accelerated at 0.4% pace in March and 3.5% YoY, beating expectations of 0.3% and 3.2%, respectively. Risk aversion sent US yields and the US Dollar surging.
- Treasury yields for the US 10-year note have surpassed the key 4.5% level for the first time this year. The 2-year yield has rallied about 40 basis points in three days to test the 5% level.
- On Wednesday, BoC left interest rates unchanged at 5%, but Governor Macklem revealed that committee discussed possibility of cutting rates, adding negative pressure to CAD.
- Futures market bets for Fed rate cuts in June have dropped to 20% from levels above 50% before US CPI report, according to CME Group’s FedWatch Tool.
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