Ella 
USD/CAD continues to move higher on strong US producer price index.
U.S. inflation fell at an annual rate in September.
Falling crude oil prices weighed on the Canadian dollar.
USD/CAD extended gains for the second consecutive day in Asia on Thursday and is in bullish territory around 1.3600. USD/CAD found upward support after strong U.S. economic data and the release of the Federal Reserve meeting minutes.
The U.S. Producer Price Index (PPI) rose in September from 2.0% to 2.2%, which was better than the 1.6% expected. Market focus turns to the Consumer Price Index (CPI) released on Thursday. Forecasts show inflation falling to an annual rate of 3.6% in September from 3.7%. Additionally, investors will also be watching the weekly jobless claims report.
The minutes of the Fed meeting showed different views, indicating the central bank’s view of the importance of monetary policy relying on economic data. Some participants believed that a sharp rise in inflation would be crucial to reaching expectations for further interest rate hikes.
Some Fed officials attending the meeting argued that as policy rates approach or reach their peak, the focus of monetary policy decisions and communications should shift from determining how much to raise rates to assessing the duration of keeping policy rates at restrictive levels.
Federal Reserve officials issued dovish remarks or maintained a neutral policy stance, and market speculation that the Federal Reserve may give up on raising interest rates is rampant. This speculation has led to subtle changes in monetary policy expectations.
Fed Governor Christopher Waller recommended a wait-and-see approach to the outlook for interest rates, noting that tightening financial markets “will do some work for us.” Meanwhile, Fed Governor Michelle Bowman said Tends to raise interest rates again on the grounds that inflation continues to be above the Fed’s 2% target. The current economic situation is more complicated due to completely different views on interest rate policy within the Federal Reserve.
The U.S. dollar index was struggling around 105.70 at press time as U.S. bond yields fell. As of press time, the 10-year U.S. Treasury yield was 4.57%.
The Canadian dollar (CAD) is facing challenges as oil prices retreat from one-week highs. However, tensions in the Middle East caused the Canadian dollar to rise as Canada is the largest oil exporter to the United States.
As of press time this Thursday, WTI oil prices continued to fall to US$81.70 and hit US$86.01 per barrel.
