Ella 
USD/CAD moved higher towards 1.3450 during the Asian session on Wednesday, snapping a two-day losing streak. USD/CAD came under pressure after Canada released better inflation data on Tuesday.
Canada’s consumer price index in August was at an annual rate of 4.0%, exceeding the expected value of 3.8% and the previous value of 3.3%. However, the consumer price index rose 0.4% on a monthly basis, slightly lower than the previous reading of 0.6%, but still better than the 0.2% expected.
The Bank of England’s core consumer price index (annual rate) was 3.3%, up from the previous reading of 3.2%.
Additionally, a surge in crude oil prices also boosted the Canadian dollar (CAD). Concerns about dwindling global supplies have led to rising oil costs. At press time, WTI crude oil prices were trading around $89.90.
The U.S. Energy Information Administration (EIA) warned that U.S. shale oil production is expected to decline further in October. The Energy Information Administration’s drilling production report shows shale oil production is expected to reach 9.393 million barrels per day, the lowest level since May of this year.
The U.S. dollar index (DXY) experienced a “seesaw” trend during the U.S. session on Tuesday. Deteriorating market sentiment and rising U.S. bond yields pushed the U.S. dollar index initially down to 104.80, but quickly rebounded to break above the 105.00 level again.
Market sentiment seems to be that the Fed will keep interest rates in the existing range of 5.25%-5.50% in September. This stance is likely to weigh on the US dollar (USD). The CME FedWatch tool shows the likelihood of another rate hike between the November and December meetings has diminished.
However, the dollar may find support in the prospect of higher policy rates for the longer term. This is thanks to the resilience of the U.S. economy, marked by declining inflationary pressures and continued labor market growth.
