- USD / CAD rose sharply during US trading hours.
- The US Dollar Index is holding on to daily gains around 90.50.
- Rising US Treasury yields and bullish data propel the USD on Thursday.
The pair USD / CAD It gained traction during US business hours and rose to its highest level in nearly a week at 1.2120 before entering a consolidation phase. At time of writing, the pair was up 0.65% on the day at 1.2111.
USD Market Valuation Drives USD / CAD Movements
The renewed strength of the USD became the main theme of the market in the second half of the day on Thursday. Upbeat US data figures and rising US Treasury yields gave the dollar a boost and the US dollar index (DXY) hit its strongest level in nearly three weeks at 90.55. At the moment, the DXY is up 0.7% to 90.53.
Data released by the Automatic Data Processing Research Institute (ADP) showed on Thursday that private sector employment in the United States increased by 978,000 in May, beating the market’s expectation of 650,000 by a wide margin. Additionally, weekly Initial Unemployment Claims decreased to 385,000 from 405,000.
Additionally, Markit’s Services PMI and ISM’s Services PMI posted new all-time highs in May at 70.4 and 64, respectively. More importantly, these publications highlighted mounting price pressures at a solid pace and reignited concerns about inflation. Consequently, the benchmark yield on 10-year US Treasuries has risen more than 2% on the day.
Commenting on the services PMI report, “unprecedented price and output growth rates will inevitably lead to speculation about a reduction in Fed policy earlier than expected,” said Chris Williamson, chief business economist at IHS. Markit.