- US political uncertainty related to the economy weighs on the dollar.
- Western Texas Intermediate advances, propping up the Canadian dollar.
- The Federal Reserve’s economic reading indicator, the underlying PCE remained unchanged at 3.6%.
The USD / CAD it cuts earnings for the second day in a row, trading at 1.2661, modestly below 0.14% for the day at the time of writing.
Market sentiment is mixed. Rising inflationary pressures around the world, although “temporary”, are beginning to worry central banks. In addition, the slowdown in the labor market recovery and debates in the US Senate and House of Representatives over US President Joe Biden’s economic agenda add pressure on the US dollar.
The major US stock indices are gaining between 0.04% and almost 1%, while the US dollar index, which measures the performance of the dollar against a basket of six currencies, is down 0.21%, standing at 94.05.
The price of the Western Texas Intermediate weighs on the USD / CAD pair
The WTI, which influences the Canadian oil export economy, is up 0.22%, trading at $ 75.11, which boosts the Canadian dollar.
Leaving this aside, on the Canadian economic agenda, July’s Gross Domestic Product contracted 0.1%, better than the 0.2% decline expected by the market. By contrast, Markit’s manufacturing PMI for September fell two tenths from the August report to 57 from 57.2.
On the US front, the Fed’s favorite reading for inflation, the Underlying Index of Personal Consumption Expenditures for August, rose 3.6% year-on-year, as expected. Additionally, the ISM manufacturing PMI for September rose to 61.1, better than the 59.6 expected by analysts. The expanded demand for manufacturing products reinforced the reading.
Additionally, the University of Michigan consumer confidence rose to 72.8 more than the 71 forecast. Although it remained near pandemic lows, Americans are a bit more optimistic about current economic conditions.
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