Canadian Dollar news and market movers

The Canadian Dollar (CAD) is falling versus the US Dollar (USD) on the back of predictions of greater interest rate hikes in the US compared to Canada. 

The US Federal Reserve (Fed) has already raised its base lending rate, the Fed Funds Rate, to a higher level of 5.25%, compared to the Bank of Canada’s (BoC) Policy Interest Rate of 4.75%.

According to Trading Economics, the Fed is expected to hike rates by 0.25% in both Q3 and Q4 before peak rate is reached. This compares with only one 0.25% hike in Q3 in the case of the BoC.

US Treasury Bond yields, the return investors can expect from holding bonds, are generally higher than their Canadian counterparts, further drawing investor capital and supporting the currency. The benchmark 10-year US Treasury Bond yield is at 3.859% compared to the 10-year Canadian Government Bond’s 3.352%. 

Both countries’ yield curves are showing inversion, suggesting rates will peak in the near-term before falling, which is in line with Trading Economics’ forecasts. Yield curve inversion is also potentially a warning of impending recession.

OPEC’s triennial get-together, the 8th International Seminar, is underway in Vienna and will last till the end of July 6. Oil Ministers from member states will meet other key players in the field of global energy. Reporters’ access to the event has been limited, but there is a possibility of news leaks impacting Oil prices and therefore CAD, since Crude is Canada’s largest export. 

The most recent issue to have come under the spotlight for the Oil market is concern regarding Saudi and Russian supply, so any news regarding this could impact markets. 

Weekly inventory figures from the American Petroleum Institute (API) are scheduled for release at 14:30 GMT and may impact Oil prices and therefore USD/CAD if they show an unexpected change in inventories.