USD/CAD rallied on Tuesday from a low of 1.3524 to a high of 1.3637 and is up over 0.7% on the day. The US Dollar is firmly bid as risk sentiment soured in Europe on returning banking worries and is sinking all ships with the high beta currencies, such as CAd, taking the brunt of it.
The US Dollar index, DXY, was last up 0.6% at 101.92, a touch off the highs at 101.949 that were bourne out of worrying earnings from First Republic Bank and UBS. Plunging deposits at First Republic Bank have reignited worries over the health of the banking sector and UBS reporting a 52% slide in quarterly income as it prepares to swallow fallen rival Credit Suisse has not helped to encourage any hunger for risk in the financial markets.
Meanwhile, the price of oil, one of Canada's major exports, has dropped with WTI falling from a high of $79.02bbls to a low of $76.57bbls. US Dollar strength today is pressuring energy prices and the concerns that a slowdown in the global economy will curb energy demand are weighing on the black gold which is hurtling towards the OPEC production cut bullish gap´s origin near $75.65bbls, WTI.
Domestically, the Bank of Canada is due to release its monetary policy deliberations for the April 12 interest rate decision on Wednesday and these will be parsed for any indication of a lower bar to resume tightening after the more hawkish messaging over the last two weeks, analysts at TD Securities explained. The analysts added that the BoC´s governor, Tiff Macklem, has already acknowledged discussing hikes in his media roundtable, and argued that ´´a more hawkish tone from the minutes could see markets price a higher probability of additional rate hikes in upcoming BoC meetings.´´
To note, the central bank left its benchmark rate on hold for a second straight meeting at a 15-year high of 4.50% and raised its growth forecast for 2023 to 1.4% from 1.0% in January.
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