The USD/CAD Pair Recovers From 1.3800 In Anticipation Of US Inflation Data

The USD/CAD pair recovers after finding support near 1.3800 prior to the October inflation data from the United States. Amid apprehension, the Loonie asset rebounded as inflation data provided additional insights into the probable monetary policy action that the Federal Reserve (Fed) would undertake in December.

S&P500 futures experienced losses during the London session, indicative of a risk-averse sentiment. The US Dollar Index (DXY) is persistently striving to surpass the immediate resistance level of 106.00. In anticipation of US Consumer Price Index (CPI) data, 10-year US Treasury yields surge to near 4.66%.

The consensus estimate is that the core CPI, which excludes volatile food and energy prices, increased by 0.3% per month. A 4.1% increase in the annual core CPI is also anticipated. An increase in persistent US inflation data would heighten the likelihood that the Federal Reserve will implement additional policy tightening.

Jerome Powell, chairman of the Federal Reserve, described current interest rates as insufficient to contain price pressures last week. Powell stated that if inflation persists, the Federal Reserve will not hesitate to increase interest rates further.

In the interim, the price of oil endeavours to recover after finding buying interest near $75.00, as OPEC anticipates China to maintain steady demand in 2024. Notably, Canada is the preeminent oil exporter to the United States, and an increase in crude prices provides support for the Canadian dollar.