USD/CAD posts modest gains above the 1.3600 mark ahead of US Retail Sales, Canadian CPI
- USD/CAD holds positive ground around 1.3620 on Tuesday.
- Philadelphia Fed President Patrick Harker maintained their dovish stance, by saying that the Fed should hold rates steady.
- A correction of oil prices exerts pressure on the commodity-linked Loonie.
- Traders will monitor the US Retail Sales, and Canadian inflation on Tuesday.
The USD/CAD pair posts modest gains during the early Asian session on Tuesday. Market players await the Canadian inflation data due later in the day. The annual and monthly Canadian Consumer Price Index (CPI) for September is expected to rise 4.0% and 0.1%, respectively, The pair currently trades around 1.3620, gaining 0.07% on the day.
Many Federal Reserve (Fed) officials including Chicago Fed President Austan Goolsbee and Philadelphia Fed President Patrick Harker maintained their dovish stance. Harker stated on Monday that the central bank should not create new pressures in the economy by increasing the cost of borrowing. Harker added that in the absence of some turn in the data Fed should hold rates steady. The additional dovish comments from the Fed officials this week might weigh on the Greenback and cap the upside for the USD/CAD pair.
The Federal Reserve Bank of New York reported on Monday that the US NY Empire State Manufacturing Index for October dropped to 4.6 from the previous reading of 1.9 rise, above the expectation of a 7.0 decline. The data suggest a possible softening in manufacturing activity at the start of the fourth quarter. Meanwhile, a decline in oil prices undermines the commodity-linked Loonie as the country is the leading oil exporter to the US.
On the CAD’s front, data released from Statistics Canada on Monday revealed that the nation’s Manufacturing Sales for August came in at 0.7% MoM from 1.6% in the previous reading, below the market expectation of 1.0%. Meanwhile, Wholesale Sales dropped 2.3% versus 0% prior, worse than the market consensus of 2.6%.
On Friday, Bank of Canada (BoC) Governor Tiff Macklem said that the recent rise in long-term bond rates is not a substitute for monetary policy and the economy is not headed for an imminent recession. Macklem went on to say that the central bank would consider the tighter financial conditions due to rising long-term bond rates before its forthcoming policy meeting on October 25.
Market participants will keep an eye on the US Retail Sales data, which is expected to rise 0.2%. Additionally, the Canadian Consumer Price Index (CPI) for September will also be released. These figures could trigger the volatility in the market and give a clear direction to the USD/CAD pair.