USD/CAD mostly flat today ahead of key data releases

Key Movers

CME Futures are currently indicating there is a 95% chance that the US Federal Reserve will raise interest rates by 25 basis points (bps) at the next Federal Open Market Committee (FOMC) meeting later this month. If the Fed decides not to raise rates, markets will likely see the US dollar index (DXY) fall below 101, a yearly low and a major support level for all of 2023. The market is also eyeing key inflation data out of the US tomorrow which should give further clarity about where the Fed will take interest rates.

In the Eurozone region, German year-over-year inflation rates rose in June, the first increase in inflation since the beginning of the year. Year-over-year inflation hit 6.4% compared to 6.1% in May. Inflation is proving to be very sticky which means the European Central Bank (ECB) may still need to hike rates further to combat it.

The UK unemployment rate has exceeded expectations at 4% versus the expected 3.8% and higher than May’s reading of 3.8%. Jobless claims also jumped to 25,700 in June compared to last month’s dip of -22,500. On the other hand, the UK wage growth is up 7.3% year-over-year, beyond the expected 7.1%. This wage growth could be a possible indicator that the Bank of England (BoE) may not be finished hiking rates.

China’s new bank loans jumped more than expected in June. China extended 3.05 trillion Chinese yuan, exceeding expectations of only 2.34 trillion CNY. This more than doubles the amount extended in May. This depicts China trying to spur economic growth as they recover from COVID losses.