USD/CAD rebounds from 1.3800 and attention turns to US inflation data.

• USD/CAD recovers from 1.3800 ahead of US CPI data.
• Economists expect the US core CPI to grow at a stable pace in October.
• The Fed’s Powell called current interest rates inadequate to control price pressures.

The pair USD/CAD bounces after finding support near 1.3800 ahead of US inflation data for October. The pair rebounded amid anxiety as inflation data would provide more clues on the Federal Reserve’s (Fed) likely monetary policy action in December.

S&P 500 futures posted some losses in the London session, reflecting a state of risk aversion. The Dollar Index (DXY) continues to struggle to break above the immediate resistance of 106.00 points. US 10-year Treasury yields advance to around 4.66% ahead of Consumer Price Index (CPI) data.

According to the consensus, the core CPI, which excludes the volatility of food and oil prices, grew at a constant rate of 0.3% monthly. The annual core CPI would also grow by 4.1%. Persistent inflation data in the US would increase the risk of further tightening of monetary policy by the Federal Reserve (Fed).

Last week, Fed Chairman Jerome Powell called current interest rates inadequate to control price pressures. Powell stated that the Fed will not hesitate to raise interest rates further if inflation remains persistent.

Meanwhile, the oil price is trying to recover after discovering buying interest near $75.00, as OPEC sees stable demand from China in 2024. It should be noted that Canada is the main oil exporter to the United States and Higher oil prices support the Canadian dollar.