- The US dollar falls sharply after the publication of US inflation data.
- US inflation cooled to 3.2% in October; the core CPI decreases to 4.1%.
- USD/CAD rises strongly, losing nearly 100 pips in a few minutes.
USD/CAD has gone from trading just below the 1.3850 level to falling below 1.3750 in just a few minutes following the release of US Consumer Price Index (CPI) figures for October, which came in below the expectations. The Dollar Index has dropped sharply and has fallen below 104.80, reaching its lowest level since September 20.
US inflation cools, as do Fed rate hike expectations
The US Bureau of Labor Statistics (BLS) has revealed that inflation in the US decreased to 3.2% year-on-year in October, based on changes in the Consumer Price Index (CPI). The core CPI, which excludes volatile food and energy prices, rose 4% over the same period, missing analyst forecasts for a 4.1% rise. On a monthly basis, the headline CPI remained stable, while the core CPI recorded a growth of 0.2%.
Following the release of the data, the probability of a rate hike in December fell to virtually 0% from 14% previously, according to the CME’s FedWatch tool.
US Treasury yields saw a significant decline following the report, falling more than 3%. The 10-year yield fell from 4.62% to 4.50%.
Attention now focuses on Wednesday’s Producer Price Index (PPI) and retail sales figures for October to continue placing bets ahead of the upcoming Fed meetings.
Meanwhile, WTI oil prices are up more than 0.65% on the day, trading at $78.97 at the time of writing. The increase in oil prices also benefits the CAD, a currency linked to commodity prices, which could increase the downward pressure on the USD/CAD in the short term.
The combination of a weaker US dollar, lower Treasury yields, rising oil prices and improving risk appetite have pushed the USD/CAD pair below 1.3750. At the time of writing, the pair is at daily lows near 1.3740.
USD/CAD daily chart
USD/CAD technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
