Ella 
In early trading in Asia on Wednesday, USD/CAD fluctuated slightly above the 1.3500 mark. The US Federal Reserve’s hawkish stance and the market’s continued risk aversion overall boosted the US dollar. Meanwhile, the U.S. dollar index (DXY), which measures the greenback’s value against a basket of foreign currencies, held above 106.20, its highest level since November. USD/CAD is currently trading around 1.3510, down 0.05% on the day.
With no data coming out of Canada on Wednesday, USD/CAD remains subject to U.S. dollar volatility. However, a rebound in oil prices could limit upside for USD/CAD and support the commodity-linked Canadian dollar, as Canada is a major oil exporter to the United States.
Economic data on Tuesday showed the U.S. Conference Board consumer confidence index rose to 103.0 in September from 108.7 in August. The U.S. Conference Board consumer confidence index fell to its lowest level in four months in September, reflecting the impact of rising interest rates and concerns about the political environment. Meanwhile, building permits rose to 1.541 million in August from 1.443 million previously. The house price index rose to 0.8% in July from the previous reading of 0.4%, above the consensus estimate of 0.5%. New home sales fell to -8.7% in August from 8% in July.
The Fed decided to keep interest rates unchanged at its September meeting last week in a range of 5.25% to 5.50%. In terms of macroeconomic forecasts, most committee members still expect the Federal Reserve to further raise interest rates later this year. Minneapolis Federal Reserve President Neel Kashkari said on Tuesday that he is among Fed policymakers who believe there will be one more interest rate hike this year. He added that U.S. interest rates may have to go a little higher and stay high for longer to cool the economy. This in turn boosts USD/CAD.
Market participants will await Wednesday’s U.S. durable goods orders report. The core personal consumption expenditures (PCE) price index, the Fed’s preferred measure of consumer inflation, is expected to fall to 3.9% from 4.2% on Friday. Traders will look to this data for USD/CAD trading opportunities.
