USD/CAD finds support near 1.3440 ahead of Canadian Retail Sales
- USD/CAD has sensed some buying interest near 1.3440 as the focus shifts to Canadian Retail Sales data.
- S&P500 ended Wednesday’s session on a bullish note on hopes that US Treasury will get raise in debt-ceiling.
- Rising expectations of US debt ceiling raise approval have eased demand for US Treasury bonds.
The USD/CAD pair has attempted a recovery after gauging bids near 1.3440 in the early Asian session. The Loonie asset has rebounded as the US Dollar Index (DXY) has also picked bids near 102.80. Earlier, the USD index witnessed selling pressure after failing to sustain above the critical resistance of 103.00 as Republican House of Representatives Joseph McCarthy announced that negotiations with the White House will reach a deal of raising the US borrowing limit.
S&P500 ended Wednesday’s session on a bullish note on hopes that US Treasury will get raised in debt-ceiling and will be able to pay its obligated bills on time. Also, the expectations for a pause in the policy-tightening process are solid as tight credit conditions by the Federal Reserve (Fed) have resulted in lower credit disbursals by regional banks to small-scale firms. The overall issue is easing labor market conditions and firms are underutilizing their overall capacity due to lower working capital credit.
US delegates don’t have another option than to allow raising the US debt ceiling to avoid default in obligated payments by the Federal, however, spending initiatives will definitely cut ahead. Rising expectations of US debt ceiling raise approval have eased demand for US Treasury bonds. This has led to a jump in the 10-year US Treasury yields above 3.57%.
On the Canadian Dollar front, after recording some persistence in inflationary figures, investors are shifting their focus toward Friday’s Retail Sales (March) data. Monthly Retail Sales data is seen contracting by 1.4% vs. a contraction of 0.2% recorded earlier. A decline in households' demand would offset the impact of a rebound in inflation and will allow the Bank of Canada (BoC) to keep its interest rate policy steady further.