USD/CAD at a 10-Week Low Ahead of Key Inflation Report

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Principal Points:

• USD/CAD reached a 10-week low on Tuesday, slipped under the 200-day moving average
• Important CPI report from the US will show if inflation stays high for another month

What’s Moving in the Markets?

Market participants have been increasing their bets on the Canadian dollar. The USD/CAD pair just yesterday reached a 10-week low amid surging oil prices.

The Canadian currency is closely tied to oil, in particular, to West Texas Intermediate (WTI) oil. The reason for this is the fact that WTI oil is a major Canadian export. On that note, a correlation in their prices could be observed. In other words, when oil prices climb, it is highly likely that the Canadian dollar advances as well.

Against that backdrop, oil prices have been rallying since their pandemic lows in April 2020. Presently, the US benchmark, WTI, hovers above $80 a barrel. At the same time, the global oil gauge, Brent crude, is steady near its multi-year above $83 a barrel.

That being said, the USD/CAD slipped to levels near 1.2450 with a weekly low of 1.2430. It’s also important to note that, for the past few days, the exchange rate has dived under the 200-day moving average. The indicator is used to identify whether a trend is moving up or down in the longer run.

Where’s Bitcoin Headed Today?

Bitcoin, along with other major cryptocurrencies, is hovering slightly lower on Wednesday. Following several days of almost uninterrupted gains, bitcoin ended Tuesday’s session lower by about 3%. The orange coin is presently changing hands near $55,500 a coin.

Despite yesterday’s modest pullback, the leading cryptocurrency has been gaining traction this month. Since Oct. 1, the price of bitcoin has surged about 30%, surpassing $1tn in market capitalization.

Several important developments have contributed to the positive performance of cryptos. On the one hand, regulations from the US are expected to allow the rally to continue. Major US institutions have already said they have no plans to crack down or ban digital assets. The news has largely helped boost the valuation of the market over $2.3tn.

What’s the Big Picture for Traders?

The global financial markets are pushing deeper into the fourth quarter with major economies giving mixed signals. With that in mind, traders and investors today will be busy digesting crucial data coming from the US.

In particular, September’s US consumer inflation report will be closely watched. Analysts expect to see higher prices persisted over the past month. On that note, consumer prices are projected to land at a 5.3% annualized growth rate. The number, if realized, would suggest inflation might not be going away soon. In turn, this would present increased challenges for the US Federal Reserve.

Moreover, bank earnings kick off the third-quarter earnings report on Wednesday. Wall Street giant JPMorgan reports financial figures before the opening bell today.

Adding to the flurry of economic data, the Federal Reserve publishes its meeting minutes from its last gathering. To this end, traders will look for clues about a potential timeline around the Fed’s planned withdrawal of monetary stimulus.

Economic Data Coming Up Today (EST times)

The core CPI data from the US arrives at 08:30. Next, The FOMC Meeting Minutes are slated for release at 02:00 pm. In the evening, Australia will report its employment change for September.