The USDCAD prints a fresh four-week high at 1.3651 after the Bank of Canada (BoC) revealed its latest monetary policy minutes, which were perceived as neutral. However, a risk-off impulse and falling oil prices undermined the Canadian Dollar (CAD), a tailwind for the USD/CAD. At the time of writing, the USD/CAD is trading at 1.3642.
USD/CAD climbs as sentiment deteriorates and falling oil prices undermine the CAD
Sentiment remains fragile, as shown by US equities. The latest Atlanta Fed GDPNOW, a model that estimates GDP in the US, came at 1.1%, vs. a prior’s estimate of 2.5%, for Q1 2023. The report flashed a slowdown in the US economy, sparking demand for safe-haven assets and underpinning the US Dollar (USD) to the detriment of the CAD. Additionally, oil prices, mainly WTI, is falling off the cliff at $74.24 per barrel, down 3.70%.
The latest minutes of the Bank of Canada (BoC) revealed discussions about hiking rates in April or waiting for more evidence. However, the Governing Council (GC) noted that inflation was declining, aligned with the BoC’s forecasts. Moreover, it signaled that no rate cuts are expected in 2023, and the bank will act if higher rates are needed.
Aside from this, the US economic docket revealed Durable Good Orders for March exceeded estimates and rose 3.2% MoM, above the last month’s reading. Excluding transportation, the so-called core Orders climbed 0.3%, above forecasts.
US Treasury bond yields were gaining ground and helped the greenback to bounce from two-week lows, reaching 101.013, according to the US Dollar Index (DXY). The DXY sits at 101.468, down 0.37%.
Therefore, the USD/CAD soared and hit a new two-day high at 1.3651, and as long as it persists above 1.3600, a test to 1.3700 is on the cards.
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