CAD slides as USD makes gains against most majors

Key Movers

The USD Index (DXY) is up to start the week getting pushed higher by multiple factors. The basket of currencies saw a low last week of 105.34 but is edging back to 108 in the early trading. A combination of a COVID resurgence in China and a hesitant ECB have combined with strong short-term bond rates to help the US dollar heading into a short trading week.  The key data release this week will be Wednesday with durable goods orders which are expected to be up 0.4% being joined by the release of the minutes from the last FOMC meeting.

The euro is down to start the week as ECB board member Laine suggested in an interview over the weekend that the bank likely will not raise rates by 0.75% at its next announcement even as inflation in the trading zone stays over 10%.  He noted that the platform for a very large rate hike likely was no longer there. He then went on to say “the more we’ve already done, the less we need to do.”

A resurgence in Chinese Covid cases has many of the APAC currencies starting the week on the back foot. There were 24,000 cases reported yesterday, this is weighing on markets as fears are that recently relaxed restrictions may go back into place.