USD/CAD copies Oil’s inaction above 1.3300 as US inflation data loom – by anilpanchal7 USDCAD Oil Inflation Fed RiskAppetite
That said, the quote’s latest weakness could be linked to the US Dollar’s failure to defend the previous weekly gains amid downbeat US Treasury bond yields. However, the softer price of Oil, Canada’s key export, joins the hawkish Federal Reserve comments to tease USD/CAD bulls.remains depressed at around $79.50 amid the fears of more releases of the US Strategic Petroleum Reserves .
Elsewhere, Fed Governor Michelle Bowman said that the Federal Reserve will need to continue to raise interestin order to get them to a level high enough to bring inflation back down to the central bank's target rate, per Reuters. Before him, Philadelphia Federal Reserve President Patrick Harker pushed back the chatters of a Fed rate cut during 2023. However, the policymaker did mention, “Fed not likely to cut this year but may be able to in 2024 if inflation starts ebbing.
It should be noted that the easing of the US inflation expectations from the multi-day high seemed to have weighed on the US Treasury bond yields and the US Dollar of late. That said, the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve eases from monthly highs to 2.31% and 2.44% at the latest.
While portraying the mood, S&P 500 Futures print mild gains while Wall Street closed in green and weighed on the US Dollar. That said, the US 10-year Treasury bond yields drop nearly two basis points to 3.69% at the latest. Looking ahead, USD/CAD traders should closely observe the US CPI data as the recent Federal Reserve comments appear light when suggesting more rate hikes. Also, the Fed policy pivot talks aren’t far from the table and hence any disappointment from the US inflation numbers won’t hesitate to propel the Loonie pair further toward the south. Also important to watch is the Oil price.
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