The US dollar is strong across the board today but nowhere is it stronger than against its Canadian counterpart. USD/CAD is up 45 pips to 1.3433, or 0.3%, to pace the FX market.
Today's Canadian PPI data emphasized the u-turn in Canadian price pressures as the y/y reading fell into negative territory.
That decline underscores the Bank of Canada's forecast that CPI inflation will fall to 3% this summer and that could lay the groundwork for the BOC eventually cutting rates. Canada's central bank was the first major central bank to hike rates this cycle and it wouldn't be a surprise if they were first to cut.
Oil is another drag on the loonie as crude trades $1.34 lower and touches the bottom of the post-OPEC range. Weekly US inventory data is due at 10:30 am ET and that could add more volatility.
In equities, bank earnings continue to roll in and have been strong but the market is jittery today on higher yields due to hot UK inflation and worries about Tesla earnings after the bell. S&P 500 futures are 22 points lower, or -0.7%.
Techniaclly, the inability for USD/CAD to break the band of support around 1.32 was telling last week and it has been bouncing from there. So far it's a standard bounce/consolidation but it will need some help from oil, risk appetite and Canadian domestic data to break closer to 1.30.
