Wall Street continued to trade with losses after S&P Global reported that the activity of businesses in the United States (US) jumped. On its final reading, April’s S&P Global Manufacturing and Services PMIs rose above estimates at expansionary territory. Consequently, the Composite Index in the previous reading was 53.5, above 52.3.
Therefore, the USD/CAD rose sharply to the daily high above the R4 pivot point at 1.3558 before retracing to the R3 pivot at 1.3535. US bond yields edged up on growing concerns that business activity improvement could impact inflation to the upside, warranting higher interest rates.
The US Dollar Index, a gauge for the buck’s value against six currencies, erased some of its previous day losses, up 0.03%, at 101.825, a tailwind for the USD/CAD.
On Thursday, Federal Reserve policymakers continued their hawkish rhetoric. Philadelphia Fed President Patrick Harker suggested the US central bank is close to ending its campaign to control inflation. At the same time, Cleveland’s Loretta Mester believes rates should go above 5% due to high inflation. The current benchmark rate is between 4.75% and 5%.
On the Canadian front, Retail Sales for February plunged but were above forecasts of 0.6% MoM contraction, which stood at -0.2%, according to Statistics Canada. The data reinforce the Bank of Canada’s (BoC) decision to keep rates unchanged at their latest meeting.
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