USD makes minimal gains following the Fed’s rate hold last week

Key Movers

The euro is expected to experience further declines this week ahead of France's upcoming snap elections, driven by the growing support for Marine Le Pen's far-right party in recent polls. The market’s primary concern was the potential for increased spending under far-right leadership, which could worsen France's budget deficit. Moreover, concerns about fiscal sustainability have intensified following recent credit rating downgrades by rating agencies.

In the UK, the Bank of England (BoE) convenes next week, with expectations shifting towards a single rate reduction later this year, potentially in November. UK economic growth slowed significantly, accompanied by persistent wage inflation. The pound, on a trade-weighted basis, was at its highest level since the Brexit referendum in 2016. Investors will continue to closely watch polling data ahead of the upcoming July 4th elections.

The Canadian dollar showed minimal movement last week and dipped slightly against most major currencies this morning. It performed better than the struggling MXN and EUR but has lagged behind its commodity-linked counterparts, the AUD and NZD. In data releases, Housing Starts, which outlines the number of new residential buildings that began construction during the previous month, came out at 265,000, above forecasts of 247,000. This outcome was positive for the Canadian economy as it showed growing construction projects. Foreign Security Purchases data was released this morning as well. This showed the total value of domestic stocks, bonds, and money-market assists purchased by foreigners. The data vastly surpassed expectations of 12.30 billion, to stand at 41.16 billion. This positive outcome could add strength to the CAD. In oil news, West Texas Intermediate (WTI) crude oil was up over 1% this morning to 79.381. This rise in oil could help bolster the Loonie.