USD/CAD sticks to modest gains above 1.3800 mark, eyes US CPI for fresh impetus – by hareshmenghani USDCAD Recession Fed Inflation Currencies
ession. Spot prices, however, manage to hold above the 1.3800 round-figure mark as investors prefer to stay on the sidelines and brace for the crucial US consumer inflation figures.seems to underpin the commodity-linked loonie and acts as a tailwind for the USD/CAD pair. The fundamental backdrop, however, still seems tilted in favour of bullish traders and supports prospects for an extension of the recent rally from the 1.3500 psychological mark.
Investors remain worried that a deeper global economic downturn and a resurgence in COVID-19 cases in China will hurt fuel demand. In fact, OPEC on Wednesday lowered its global oil demand growth estimates for both 2022 and 2023. This, to a larger extent, overshadows the initial enthusiasm over the OPEC+ decision last week to slash production by the most since the 2020 COVID pandemic and should cap any meaningful recovery for the black liquid.
The US dollar, on the other hand, is seen consolidating its recent gains recorded over the past week or so, though remains well supported by more hawkish cues from the Federal Reserve. In fact, the minutes from the last FOMC meeting on September 20-21 released on Wednesday showed that officials remain committed to raising interestto curb inflation. Hence, the focus remains glued to the crucial US CPI report, due later during the early North American session.
Given that US Producer Price Index climbed more than expected in September, investors anticipate consumer inflation to remain stubbornly high and reinforce the Fed's hawkish rhetoric. This, in turn, favours the USD bulls and adds credence to the near-term positive
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