USD/CAD - Canadian Dollar Swamped by FOMC| MENAFN.COM

Friday, 20 May 2022 03:58 GMT

USD/CAD - Canadian Dollar Swamped by FOMC

(MENAFN- USD/CAD - Canadian Dollar Swamped by FOMC

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- BoC and FOMC meetings end on hawkish note
- Oil price surge ignored by Canadian dollar traders.
- US dollar soars as Commodity currencies sink
USDCAD Snapshot: Open 1.26702-06, Overnight Range-1.2659-1.2725, previous close 1.2668, WTI open $87.31, Gold open $1811.33
The Canadian dollar took it on the chin yesterday after the Bank of Canada left interest rates unchanged. USDCAD soared to 1.2645 from 1.2560 on the news.
Nevertheless, the BoC message was hawkish and warned of interest rate increases in the coming months.
Bank of Canada Governor Tiff Macklem trumpeted that his department saved the Canadian economy from the scourge of COVID-19.
At his Monetary Policy Report press conference, he said his message was threefold.“First, the emergency monetary measures needed to support the economy through the pandemic are no longer required, and they have ended.” Second, interest rates need to increase to control inflation. Canadians should expect a rising path for interest rates. Third, in reopening an economy after repeated waves covid is complicated. Canadians can be confident that the Bank of Canada will control inflation. We are committed to bringing inflation back to target.”
Traders were disappointed because for the past several years, BoC officials have insisted that policy actions were data-dependent. Today's lack of action by the BoC, suggests that isn't quite true.
On the other hand, most analysts did not expect the Fed to raise rates, and they didn't. However, the tone of the statement and Fed Chair Powell's press conference comments led to markets pricing five rate increases in 2022.
That wasn't what Wall Street wanted to hear, and the major indexes plunged, taking Asia indexes down overnight. Prices recovered in Europe, and Wall Street is poised to open in positive territory, albeit sharply lower than yesterday's peak.
Oil prices rallied despite the surge in the greenback due to supply and geopolitical concerns. The Canadian dollar did not appear to get any benefit from the oil price rally as traders focused on US monetary policy.
EURUSD technicals are bearish after breaking support in the 1.1250-60, which targets the pandemic low of 1.0780.
GBPUSD is lower following the Fed meeting with Brexit and UK politics weighing on prices.
USDJPY soared to 115.24 from 114.49 due to US rate hike fever driving the US 10-year Treasury yield to the 1.82% area.
There are plenty of US data releases today, including Q4 GDP (forecast 5.5%y/y), Durable Goods Orders, and weekly jobless claims.

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