Canadian Dollar remains under pressure following mixed inflation data
- USD/CAD climbs for a fourth consecutive day as Fed rate hike bets support the Greenback.
- The Canadian Dollar shows little reaction to mixed inflation figures.
- Traders now await US Retail Sales and the Fed’s monetary policy decision on Wednesday.
USD/CAD edges higher for the fourth consecutive day as a stronger US Dollar (USD) outweighs support for the Canadian Dollar (CAD) from rising Oil prices. Traders show a muted reaction to the latest Canadian inflation figures. At the time of writing, the pair trades around 1.3918, up 0.35% on the day.
Statistics Canada said headline Consumer Price Index (CPI) fell 0.1% MoM in August, missing expectations for a flat reading and reversing July’s 0.5% increase. Annual inflation held steady at 3.0%, matching market forecasts.
The Bank of Canada’s (BOC) core CPI increased 0.1% MoM, down from 0.2% in the previous month, while the annual rate edged up to 2.4% from 2.3%. The mixed report does little to alter the near-term policy outlook after the BoC kept its interest rate unchanged at 2.25% for a seventh consecutive meeting earlier this month.
In its policy statement, the BoC said, “CPI inflation has been hovering around 3% in recent months, mainly because of persistently higher gasoline prices. So far, there has been little evidence of higher energy prices spreading to other components of inflation.” However, it warned, “The longer that high oil prices and elevated refinery margins persist, the greater the risk of spillover to the prices of other goods and services.”
In contrast to the softer monthly Canadian reading, Friday’s US inflation report showed headline CPI rising 0.4% MoM in August, while core CPI increased 0.3%.
Oil prices extend their advance as Middle East tensions keep supply risks elevated. Saudi Arabia has shut its East-West pipeline, which bypasses the Strait of Hormuz, following a drone attack. The pipeline is expected to stay mostly out of service for several weeks according to the Associated Press, citing officials. West Texas Intermediate (WTI) Oil trades around the $100 mark, up over 15% so far this month.
The US Dollar outperforms most of its major peers as traders track the latest Middle East developments, with additional support coming from expectations that the Fed will raise interest rates this week. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 99.63, up 0.55% on the day and at its highest level since September 3.
According to the CME FedWatch Tool, markets price in an 86% probability of a quarter-point rate increase at the September 15-16 meeting. Ahead of the Fed decision, traders will also watch the US Retail Sales report for August, due on Wednesday.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.55% | 0.39% | 0.85% | 0.34% | 0.83% | 0.93% | 0.24% | |
| EUR | -0.55% | -0.13% | 0.29% | -0.23% | 0.27% | 0.39% | -0.31% | |
| GBP | -0.39% | 0.13% | 0.40% | -0.07% | 0.42% | 0.53% | -0.24% | |
| JPY | -0.85% | -0.29% | -0.40% | -0.51% | 0.00% | 0.08% | -0.64% | |
| CAD | -0.34% | 0.23% | 0.07% | 0.51% | 0.48% | 0.58% | -0.16% | |
| AUD | -0.83% | -0.27% | -0.42% | -0.00% | -0.48% | 0.11% | -0.66% | |
| NZD | -0.93% | -0.39% | -0.53% | -0.08% | -0.58% | -0.11% | -0.76% | |
| CHF | -0.24% | 0.31% | 0.24% | 0.64% | 0.16% | 0.66% | 0.76% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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