USD/CAD grapples to surpass the 1.3600 psychological level ahead of US CPI

• USD/CAD continues to gain after robust US wholesale inflation data.
• US CPI suggests a decrease in the annual rate for September.
• Downbeat Crude oil prices contribute to pressure on the Canadian Dollar.

USD/CAD extends gains on the second day, trading in a positive territory around 1.3600 during the Asian session on Thursday. The pair is receiving upward support after robust economic data from the United States (US) and the disclosure of the Federal Open Market Committee (FOMC) meeting minutes.

US Producer Price Index (PPI) rose in September, increasing from 2.0% to 2.2%, surpassing the anticipated 1.6%. The market focus shifted toward Thursday’s Consumer Price Index (CPI) unveiling. Forecasts suggest a drop in the annual rate for September, slipping from 3.7% to 3.6%. Additionally, watch for the weekly Jobless Claims report coming your way.

The Federal Open Market Committee (FOMC) minutes revealed a divergence in perspectives, underscoring the importance of data reliance. It was suggested that a substantial increase in inflation would be vital to secure consensus for additional interest rate hikes.

Certain participants articulated the view that as the policy rate nears or reaches its peak, the focus in monetary policy decisions and communications should shift from determining the magnitude of rate increases to assessing the duration of maintaining the policy rate at restrictive levels.

Amidst dovish comments and neutral stances from officials, speculations are circulating about the US Federal Reserve (Fed) potentially abandoning the notion of a rate hike. This speculation is contributing to the nuanced and evolving landscape of monetary policy expectations.

Fed Governor Christopher Waller has suggested a watchful approach to rate developments, noting that financial markets tightening “would do some of the work for us.” Meanwhile, Fed Governor Michelle Bowman has expressed a preference for another rate hike, citing inflation persisting above the Fed’s 2% target. The contrasting views within the Fed contribute to the complexity of the current economic landscape.

The US Dollar Index (DXY) struggling to hold ground around 105.70 at the time of writing due to the downbeat US Treasury yields. 10-year US Treasury bond yield stands at 4.57%, by the press time.

The Canadian Dollar (CAD) is facing challenges as oil prices have retreated from weekly highs. However, the Loonie Dollar experienced gains due to the Middle-East tensions as Canada is the largest oil exporter to the United States.

Western Texas Intermediate (WTI) oil price extended its losses around $81.70 at the time of writing on Thursday. However, Crude oil prices marked their most notable upswing in half a year, reaching $86.01 per barrel. on Monday.