Ella 
The USD/CAD was slightly higher in early Asian trading on Tuesday. Market participants were awaiting Canadian inflation data due later in the day. Canada’s Consumer Price Index (CPI) is expected to have increased at an annual rate of 4.0% and a monthly rate of 0.1% in September. The USD/CAD is currently trading around the 1.3620 level, with an intraday gain of 0.07%.
Many Federal Reserve (FED) officials, including Chicago Fed President Austan Goolsbee and Philadelphia Fed President Patrick Harker, have maintained a dovish stance. Harker said on Monday that the Fed should not put new pressure on the economy by raising borrowing costs. Harker also said the Fed should keep interest rates steady in the absence of a turnaround in the data. More dovish comments from Fed officials this week could weigh on the USD/CAD and limit its upside.
The Federal Reserve Bank of New York reported on Monday that the New York Empire State manufacturing index fell to -4.6 in October from an increase of 1.9 in the previous month, beating expectations of -7.0. The data suggested that manufacturing activity may have slowed at the start of the fourth quarter. Meanwhile, falling oil prices have weakened the commodity-linked Canadian dollar, as Canada is a major oil exporter to the United States.
In terms of the Canadian dollar, Statistics Canada data released on Monday showed that Canadian manufacturing sales in August came in at a monthly rate of 0.7%, compared to the previous reading of 1.6% and below the expected reading of 1.0%. At the same time, the monthly wholesale sales rate was 2.3%, compared to the previous value of 0% and lower than the expected value of 2.6%.
On Friday, Bank of Canada (BOC) Governor Tiff Macklem said that the recent rise in long-term bond rates is not a substitute for monetary policy and that the economy will not fall into recession soon. Macklem also said that the Bank of Canada will consider tightening monetary policy.
