Fri, Jun 02, 2023 @ 15:52 GMT
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USD/CAD – Canadian Dollar Ticks Higher, Markets Eye CPI

USD/CAD has inched upwards in the Friday session. Currently, the pair is trading at 1.3360. On the release front, Canada will release CPI, one of the most important economic indicators. CPI was unexpectedly high in January, at 0.9%. The markets are braced for a weak February report, with an estimate of 0.2%. Traders should be prepared for possible volatility from USD/CAD around the release time of this key event.

It could be a politically charged day in Congress, with the focus on health care legislation. President Trump, who campaigned on a promise to repeal the Affordable Care Act (“Obamacare”), wants the House of Representatives to vote on Friday on a bill which repeals and replaces part of Obamacare. A vote on Thursday was shelved, as there was not enough support to pass the bill. The proposed health bill has become a litmus test for the Trump administration, as a failure to pass the bill would indicate that Trump may not be able to push through Congress his pledges to lower taxes and increase fiscal stimulus. The dollar has sustained broad losses in the past week, in part over market frustration over the lack of any details regarding economic policy from Trump. If the President cannot make good on his promise to reform Obamacare, the dollar could continue to lose ground.

The Canadian dollar is sensitive to movement in oil prices, so lower crude prices could weigh on the currency. West Texas crude has dropped 1.0% in March, and dipped to $47.05 earlier this week, its lowest level since the end of November. Crude headed lower after Crude Oil Inventories posted a strong surplus of 5.0 million barrels, crushing the estimate of 1.9 million. The weekly indicator has recorded only two declines in 2017, as US oil drillers continue to enter the market and ratchet up US oil production. This, together with increased US shale production, has more than offset OPEC’s production cuts. On Monday, OPEC announced it was considering extending the production cut agreement by another 6 months, until the end of 2017.

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