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USD/CAD fluctuates above 1.3550 in advance of US GDP/ Durable Goods report, while oil prices surge
The USD/CAD exchange rate is fluctuating above 1.3550 as attention shifts to the US growth rate and Durable Goods report. The BOC stunned the market by increasing rates by 50 basis points less than anticipated. Despite an increase in oil stocks by the EIA, oil prices have increased.
After a dramatic gyration between 1.3533 and 1.3650 in the late Tokyo session, the USD/CAD pair has drifted sideways. In Asia, the asset is exhibiting a rangebound structure between 1.3545 and 1.3582. Prior to the announcement of US critical data, the major is anticipated to stay weak.
Meanwhile, market sentiment is highly optimistic and risk-perceived currencies are having a ball. After reaching a new monthly low of 109.56, the US dollar index (DXY) had a dead cat bounce. While the 10-year US Treasury yields are still fragile and hovering around the cushion of 4%.
After the Bank of Canada's announcement of its interest rate decision on Wednesday, the Canadian dollar fluctuated in a range of 1.3545 to 1.3582. (BOC). Governor Tiff Macklem of the Bank of Canada (BOC) announced a rate increase of 50 basis points (bps), bringing borrowing rates to 3.75%. A smaller-than-anticipated increase in interest rates has shocked market players.
BOC's Macklem stated, in reference to the peak of inflationary pressures, that the central bank is still far from achieving its objective of ensuring inflation is low, stable, and predictable. Concerning policy direction, the Bank of Canada noted that they are nearing the conclusion of the tightening phase but are not yet there.
Analysts at CIBC still anticipated the rate to peak at 4.25 percent, despite the "slight easing" compared to past increases.
On the US dollar front, forecasts indicate that the US GDP grew by 2.4% in the third quarter compared to a 0.6% decline. Also, the US Durable Goods Orders are anticipated to increase by 0.6% versus a decrease of 0.2%.
As a result of the weakening of the DXY and the imposition of sanctions on Russia, the oil price surge has strengthened. Despite the Energy Information Administration's statement of a rise in oil inventories, the price of crude oil has increased to over $88, reaching a high of about $88.01. (EIA). For the week ending October 21, the oil stockpiles increased by 2.588 million barrels, compared to the forecasted increase of 1.029 million barrels.
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