Ella 
The USD/CAD struggled to gain any significant momentum on Monday, trading in a tight range around the 1.3650 level during the first half of the European session.
The U.S. Dollar opened on a weak note on Monday, and now appears to have halted the positive moves seen in the past two sessions following the release of U.S. inflation data. Recent dovish comments from several Fed officials suggest that the central bank is preparing to keep interest rates unchanged for a second straight month in November, moving closer to the end of its policy tightening cycle. This, along with a continued bullish bias in U.S. stock futures, is weighing on the greenback and serving as a tailwind for USD/CAD.
However, with the market expecting the Federal Reserve to maintain higher interest rates for longer, the dollar’s downside appears to be limited. The latest U.S. consumer inflation data released on Thursday confirmed this expectation, with U.S. consumer inflation remaining above the Fed’s target, leaving the door open for the Fed to raise rates again in 2023. At the same time, the policy outlook remains supportive of rising U.S. bond yields and should act as a tailwind for the dollar. In addition, a slight pullback in crude oil prices could weaken the commodity-linked Canadian dollar and provide some support for USD/CAD.
Therefore, it would be prudent to wait for some strength in USD/CAD before confirming that last week’s bounce from the $1.3570-$1.3565 area is over and positioning for a recent pullback from the multi-month highs reached earlier this month with follow-through selling orders. Market participants will now focus on U.S. economic data, including the Empire State Manufacturing Index. This, along with Fed speeches, U.S. bond yields, and broader market risk sentiment will boost the dollar later in the U.S. session. In addition, oil price dynamics will also provide some momentum for the USD/CAD.
