- Canadian dollar rises due to broad-based weakness in the US dollar.
- Higher crude oil prices boost the Canadian dollar.
- September Canadian CPI rose 4.4%, up from 4.1% in August.
USD/CAD falls to new weekly lows during the U.S. session, down 0.24%, trading at 1.2326 at the time of writing. Despite the Fed’s announcement about bond tapering at its November meeting and higher energy prices, the market is upbeat, buoyed by solid earnings in the US third quarter.
The Dow Jones, S&P 500 and Nasdaq all rose between 0.10% and 0.50%, while the CBOE volatility index (VIX), also known as the “fear index,” fell to 15.7, near its lowest level since February 2020, sending stocks higher.
Similarly, the U.S. dollar index, which measures the greenback’s performance against a basket of its peers, slips 0.15%, settling at 93.64. The yield on 10-year U.S. Treasury bonds, up one basis point, is currently 1.635%, not helping the dollar.
High crude oil prices boost CAD.
WTI, the U.S. crude oil benchmark, is up nearly 0.5%, trading at $82.80 per barrel, weighing on the USD/CAD pair, as shown by the 0.24% drop.
As for the macroeconomic front, the US economic docket presented the change in EIA crude oil stocks for the week ending October 15. Inventories plunged by 0.4 million barrels, leading to a slight rise in WTI prices.
Statistics Canada released the Consumer Price Index (CPI) for September, which increased 4.4% from 4.1% in August. The Bank of Canada’s (BoC) core CPI, excluding food and energy, rose 3.7%, up 36%.
Scotiabank analysts expect eight rate hikes by the end of 2023
By the end of 2023, Scotiabank analysts expect eight rate hikes from the Bank of Canada, starting in July 2022. Inflation in Canada reached its highest level since February 2003 after the forecast was released