US indices react to Fed chair Powell's testimony

The US dollar index has delivered positive performance for three consecutive sessions

By Laila Eid | @Laila Eid | 21 June 2023

  • Gold reached its lowest level since mid-March, hitting 1919.03 during today's movements

  • USD/CAD pair has performed negatively for three consecutive weeks

  • Currently, USD/CAD is trading at its lowest level since December 2022

US indices are declining due to concerns over an interest rate hike

The S&P 500 fell to 4370 for the third consecutive session, marking its longest losing streak since early May. Simultaneously, the Dow Jones Industrial Average recorded negative performance, reaching 33893 at the time of this report. The recent indication by the Chairman of the Federal Reserve about a potential interest rate hike has strengthened the US dollar, resulting in a decline in gold prices to $1918 at the start of the American session.

During their meeting, the Federal Reserve announced a fixed interest rate of 5.25%, the highest level observed since 2007. The Federal Reserve emphasized their commitment to making decisions based on comprehensive data and its implications for economic activity and inflation expectations in their pre-meeting statements. The latest Federal Reserve report projected a further increase in the interest rate to 5.6% in 2023, followed by a decrease to 4.6% in 2024.

The Canadian retail price index shows growth, while USDCAD declines

The Canadian Retail Price Index experienced a notable increase of 1.1%, reaching $65.9 billion in sales. Sales demonstrated positive growth in eight sectors, with core retail sales rising by 1.3%. According to a report from Statistics Canada, Ontario witnessed the largest surge, primarily driven by higher auto sales.

Simultaneously, USDCAD declined following the release of this news, dropping from 1.3222 to 1.3207, and it has continued to decrease, approaching the level of 1.3189 at the time of this report.