USD/CAD sustains a two-day rally near 1.4190 as hot US inflation data and a 91% probability of a December Fed rate hike overshadow support from higher oil prices.
October CPI beat forecasts at +0.4% MoM and core CPI came in at +0.3% vs 0.2% expected, lifting December Fed rate-hike odds to about 91%. Goolsbee called inflation a 'real inflation issue' with a Speechtracker score of 8/10, reinforcing a higher-for-longer Fed path that is typically constructive for the Dollar.
October US CPI rose 0.4% month-over-month, beating the 0.3% forecast, and core CPI rose 0.3% versus 0.2% expected, cementing a roughly 91% December Fed rate-hike probability. Hawkish Fed commentary (FXS Speechtracker 8/10, FXS Fed Sentiment Index at 145.61) lifts the Dollar. Second straight day of gains around 1.4190, though higher oil prices supporting the CAD and fading safe-haven demand from US-Iran de-escalation hopes restrain the upside.
The Canadian Dollar has declined for a second day as hawkish US inflation data and rising December Fed rate-hike odds strengthen the US Dollar against it. Higher oil prices around $85.70 per barrel provide some support, but the Dollar-side pressure dominates the pair's move.
WTI is gaining ground after two days of losses, trading around $85.70 per barrel, supporting the Canadian Dollar. However, the article flags that easing US-Iran tensions, with Trump suggesting further strikes may no longer be necessary, could push crude prices down, leaving the outlook mixed.
The USD/CAD pair holds gains for a second day, trading around 1.4190 as October US CPI data showing a 0.4% monthly increase fuels expectations for a December Fed rate hike. Markets now price a 91% probability of tightening, bolstered by hawkish commentary from Fed official Goolsbee. While rising WTI crude prices at $85.70 per barrel provide some support to the Canadian Dollar, the Greenback remains dominant amid a firm hawkish policy outlook.
Hotter-than-expected October CPI data and hawkish Fed commentary have lifted expectations of a December rate hike to roughly 91%, making a higher-for-longer Fed path the base case and supporting the Dollar.
The US Dollar strengthened after October CPI inflation beat forecasts (0.4% vs 0.3% expected) and markets raised the odds of a December Fed rate hike to about 91%, while hawkish commentary from Fed's Goolsbee added to the Dollar-positive tone.
Higher oil prices typically support the Canadian Dollar, and hopes for a diplomatic resolution to the US-Iran conflict reduce safe-haven demand for the US Dollar, both of which could restrain USD/CAD's upside.
The main driver is US Dollar strength after the inflation report cemented expectations for a Fed rate hike in December; the support the Loonie normally gets from higher oil prices is not enough to offset that pressure.
Crude is currently gaining around $85.70 per barrel, but signs that the US and Iran may move toward a diplomatic settlement, including Trump saying further strikes may not be needed, could send oil prices lower.