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USD/CAD: Canadian Dollar Weakens ahed of US CPI; Crude Weighs

Forex Aug 09, 2022 16:10
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By Ketki Saxena 

Investing.com - The Canadian dollar weakened against its U.S. counterpart today in a risk-off-session ahead of tomorrow’s U.S. CPI report, while the loonie was further pressured by a reversal of crude in the afternoon of the North American session. 

In a day of choppy trading, crude prices were buffeted by fresh developments in the Iran nuclear deal that could significantly ease supply concerns, a fresh blockade of Russian oil supplies in Eastern Europe, and expectations of a build in U.S. inventories, which ultimately seemed to dominate at the end of the day.  

At 4:00 p.m in Toronto, the USD/CAD pair was trading at C$1.2885 to a greenback, up 0.24% in the day’s trading and with a day’s range of 1.2844 - 1.2900.

FX Street notes “The USD/CAD slightly advances from around Monday’s lows amidst a downbeat market sentiment due to traders preparing for July’s US inflation report. Also, geopolitical jitters, spurred by US House Speaker Pelosi’s trip to Taiwan, caused an aggressive reaction from China, extending its military drills beyond the due date.”

The greenback also continues to gain from high expectations for more aggressive rate hikes from the Federal Reserve, with the U.S. central bank expected to hike the rate for a more prolonged period than the Bank of Canada. 

Following last Friday’s spectacular jobs report that quelled questions of a recession, money markets are pricing in a nearly 75 basis point hike from the Fed in September, but these odds could be diminished by tomorrow’s inflation data. 

In terms of what’s next for the pair, FX Street notes that “An absent Canadian economic docket will leave USD/CAD traders adrift to US dollar dynamics. Meanwhile, the US docket will reveal July’s US Consumer Price Index, alongside a tranche of  Fed speakers, led by Chicago’s Fed President Charles Evans and Minneapolis Fed Neil Kashkari, after the US inflation report."

USD/CAD: Canadian Dollar Weakens ahed of US CPI; Crude Weighs
 

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