USD/CAD rises to 1.3570 as US Dollar advances on firm US economic outlook

• USD/CAD climbs to 1.3570 amid firm US Dollar.
• The appeal for the US Dollar strengthens on upbeat US economic outlook.
• The Canadian Dollar weakens as BoC rate cut bets escalate.

The USD/CAD pair jumps to 1.3570 in the early New York session on Friday. The Loonie asset advances as appeal for the US Dollar strengthens on expectations that the Federal Reserve (Fed) needs not to rush for rate cuts.

The consumer price inflation in the United States economy is sticky and the US economic outlook is upbeat due to robust consumer spending and steady labor market conditions. This allows the Fed to observe more data for months before shifting to rate cuts.

This has dampened market sentiment. S&P 500 opens on a slightly bearish note amid caution that the Fed will not start reducing interest rates until it gains greater confidence that inflation will decline to the desired rate of 2%. The US Dollar Index (DXY), which tracks the value of the US Dollar against six major currencies, refreshes monthly high at 104.44.

Meanwhile, the Canadian Dollar weakens on expectations that the Bank of Canada (BoC) will start reducing interest rates. The speculation over BoC rate cuts deepen as the consumer price inflation for February remains softer than expectations.

In February, the annual headline Consumer Price Index (CPI) grew at a slower pace of 2.8% than expectations of 3.1% and the former reading of 2.9%. On a monthly basis, the headline CPI rose by 0.3% against the expectation of 0.6%. The Bank of Canada’s (BoC) preferred inflation measure, which strips of eight volatile items grew at a steady pace of 0.1% on a month-on-month basis. The underlying inflation decelerated to 2.1% from 2.4% in January.