Oct 17, 2022
VOT Research Desk
After recording an intraday low of 1.3812 during the Asian session, the USD/CAD pair has shown a less certain decline.
After the pullback’s conclusion, the asset is anticipated to begin moving downward as the risk impulse recovered from Friday’s turbulence. Despite increasing odds for a hawkish Federal Reserve, the S&P 500 is holding back the gains it made early Monday (Fed).
The demand for safe haven assets has decreased, which is reflected in the US dollar index’s (DXY) muted performance. The emphasis will continue to be on comments from Fed officials and geopolitical issues because the US economic calendar is weak. The US Treasury 10-year rates are likewise fluctuating below the crucial 4% threshold. The figures on Canadian inflation will be crucial this week.
From the previous release’s 7.0%, the headline Canada Consumer Price Index (CPI) statistic is predicted to drop to 6.8%. Additionally, the core CPI statistic might decrease to 5.6% by 20 basis points (bps).
The Bank of Canada (BOC) is sharply raising interest rates, which have already reached 3.25%, as pricing pressures deteriorate the economy’s longer-term fundamentals.
The central bank is completely disregarding the state of the economy and concentrating on providing price stability. Oil prices have increased since recording a new two-week bottom at $84.72 on the oil market front.
Investors are disregarding the gloomy economic forecast as central banks continue to tighten policy. Of addition, China’s continued stance of zero-tolerance for Covid-19 has restrained the rise in oil consumption.
It is important to remember that Canada is a major supplier of oil to the US, and that low oil prices are causing the Canadian currency to decline.
