Usdcad Will Trade In Choppy Range

 Usdcad Will Trade In Choppy Range

USD/CAD Will Trade In Choppy Range - Scotiabank

The Canadian Dollar lost the battle against the USD and was dumped by the traders. However, the bullish pressure only lasted briefly as the USD/CAD is now back to the lower range of 1.36s, which is a sign of CAD strength and USD weakness.

However, Scotiabank analyst believes that the data coming from Canada was mixed. As a result, the end result is a bearish CAD (Canadian Dollar) against other currencies.

The most significant data as of late was the Canadian CPI, which is below the market forecasts. On the contrary, the data from the US side is better than the market forecasts, which highlights a clear picture of the USD/CAD next direction.

Less Chance Of BoC Rate Hike

Overall, the CPI reading for September signals that we will not see any more tightening in the near term. At the same time, the CPI reading has also raised the requirements for any additional rate hike from the Bank of Canada (BoC).

However, this doesn't mean that the chances of an additional rate hike have touched 0% as the wage growth and inflation are still not under control.

Given this economic backdrop, the trading range of the USD/CAD will remain choppy as the crude oil will gain strength while the risk appetite will get weaker over time.

After all, if the mixed data from Tuesday was not enough to send the USD/CAD above 1.37, there's very little ahead that could allow the pair to achieve that!

It appears that the major factor that continues to affect the price action of USD/CAD is the inflation (US & Canadian side) and the interest rate. On the one hand, lower inflation will be better for the economy but bad for the currency. On the other hand, high inflation will mean a more hawkish central policy but weaker economic growth prospects.

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