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USD/CAD edges lower to 1.3510 on Wednesday.
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A rally in oil prices benefits the commodity-linked Canadian Dollar (CAD).
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US CB Consumer Confidence (Sep) rose by 103 vs. 108.7 prior, a four-month low.
The USD/CAD pair traded above the 1.3500 mark during early Asian trading hours on Wednesday. The Federal Reserve’s (Fed) hawkish stance and risk aversion boosted the US dollar (USD) across the board. Meanwhile, the US Dollar Index (DXY), a measure of the USD’s value against a basket of foreign currencies, is above 106.20, its highest level since November. The pair is currently trading near 1.3510, down 0.05% on the day.
In the absence of economic data released from the Canadian docket on Wednesday, the USD/CAD pair remains at the mercy of USD price movements. However, a rebound in oil prices could cap USD/CAD’s upside and support the commodity-linked loonie as the country is the top oil exporter to the US.
On Tuesday, economic data showed that US Conference Board (CB) consumer confidence for September rose to 103.0 from 108.7 in August. The figures fell to a four-month low and signaled concerns about the impact of higher interest rates and the political environment. Meanwhile, building permits came in at 1.541M in August from a previous reading of 1.443M. The House Price Index for July rose to 0.8% MoM from the previous reading of 0.4%, above the market consensus of 0.5%. New home sales fell -8.7% in August from an 8% increase in July.
The Federal Reserve (Fed) last week decided to keep interest rates unchanged in the range of 5.25% to 5.50% at its September meeting. Given the macroeconomic outlook, most members still expect more rate hikes later this year. Minneapolis Federal Reserve Bank President Neil Kashkari said Tuesday that he is one of the Fed’s policymakers who sees another rate hike this year. He added that U.S. rates will likely have to go a bit higher and hold there longer to allow things to cool. As a result, the USD appreciates against the Canadian dollar (CAD).
Looking ahead, market players await the US durable goods orders report due out on Wednesday. The core personal consumption expenditure (PCE) price index, the Fed’s preferred measure of consumer inflation, will remain in the spotlight on Friday with an expected drop to 3.9% from 4.2%. Traders will take cues from the data and find trading opportunities around the USD/CAD pair.
USD/CAD
