Crude Oil pressures fading, Canadian Dollar retreats

11 October 2023, Wednesday
Crude Oil pressures fading, Canadian Dollar retreats

The Canadian Dollar Takes a Step Back as the US Dollar Gains Momentum


Inflation Expectations Remain the Focus


The Canadian Dollar (CAD) is taking a slight step back on Wednesday, giving the US Dollar (USD) some breathing room. This is causing the USD/CAD pair to reach near-term highs. The market’s main focus this week is on inflation expectations. Since there is very little Canadian economic data available, the direction of the charts will depend on how the market reacts to US inflation figures for the rest of the week.


USD/CAD Pair Reaches Tuesday’s Highs


The USD/CAD pair has slipped back into yesterday’s highs as the US Dollar gains strength due to positive data. The Canadian Dollar, also known as the Loonie, is following the softening prices of Crude Oil, which is causing bidding pressure for the CAD to decrease. As a result, the USD/CAD pair is returning to Tuesday’s highs.


Canadian Economic Data and Building Permits


There is very little Canadian economic data available at the moment, except for low-impact data. However, the Building Permits for August managed to beat expectations by printing at 3.4% instead of the forecasted 0.5%. The previous reading on Building Permits was revised down significantly from -1.5% to -3.8%.


Crude Oil Prices and Recent Events


Crude Oil prices are continuing to soften, which is a result of the recent escalation between Israel and Palestinian Hamas in the Gaza Strip over the weekend. This has caused the early week’s bid spike to fade away.


Positive US Data


On Wednesday, US data beat forecasts across the board. The US Producer Price Index (PPI) for the year up to September climbed to 2.7%, surpassing the expected 2.3%. The previous reading was also revised up to 2.5% from 2.2%. The US Consumer Price Index (CPI) inflation reading, which is due on Thursday, is expected to have a significant impact on the overall market sentiment.