In the London session on Thursday, the USD/CAD pair approached 1.3450 as the sentiment for risk-associated assets turned bullish. The Canadian Dollar weakened against the backdrop of a robust outlook for riskier assets, while the US Dollar faced a substantial sell-off despite tempered expectations for Federal Reserve (Fed) rate cuts before the June monetary policy meeting.
S&P500 futures witnessed significant gains during the European session, reflecting positive market sentiment. The US Dollar Index, measuring the Greenback against six major currencies, touched a two-week low near 103.70. Additionally, 10-year US Treasury yields declined to 4.31%.
Despite the release of Federal Open Market Committee (FOMC) minutes from the January policy meeting, indicating a reluctance among policymakers to implement rate cuts in the near term, the US Dollar failed to stage a rebound. Most Fed policymakers remain unconvinced that inflation will sustainably reach the 2% target.
Investors are eagerly awaiting the preliminary S&P Global PMI data for February, scheduled for publication at 14:45 GMT. The forecast suggests a decrease in Manufacturing PMI to 50.5 from January’s 50.7, while the Services PMI, representing two-thirds of the US economy, is anticipated to be 52.0, slightly lower than the previous reading of 52.5.
On the Canadian Dollar front, attention is focused on the Retail Sales data for December, set to be released at 13:30 GMT. Expectations are for a monthly rise of 0.8%, following a contraction of 0.2% in November. Retail Sales excluding autos are predicted to have increased by 0.7%, rebounding from a decline of 0.5%. An optimistic Retail Sales report could diminish hopes of rate cuts by the Bank of Canada (BoC).
