USD/CAD has registered slight gains in the Tuesday session. In North American trade, the pair is trading at 1.3136, up 0.17% on the day.
US inflation slows in September
The US economy continues to grapple with the Covid-19 pandemic. Although there are signs of that the economic recovery gaining traction, consumer inflation remains weak. Both the headline and core readings for September slowed to 0.2%, down from 0.4% a month earlier. These figures matched the estimates, resulting in a muted response from USD/CAD.
Lower inflation gives the Federal Reserve some breathing room for further easing if members feel that the US economy needs further support. Fed Chair Powell has repeatedly said that the Fed has made use of all the tools that are at its disposal, and he had called for further stimulus from the government. Powell would be the first in line to congratulate lawmakers if they could pass a fiscal stimulus package ahead of the US election, but that scenario remains iffy at best, as the gap between Republicans and Democrats remains significant.
The markets are looking at a diet of tier-2 events out of Canada and the US until Friday, when the US releases Retail Sales and Canada publishes Manufacturing Sales. This means that mid-week could be on the quiet side for USD/CAD, barring any breaking developments such as a fiscal stimulus agreement or unexpected news from the US election race.
- USD/CAD is testing resistance at 1.3135. Above, there is resistance at 1.3160
- 1.3093 is providing support. This is followed by support at 1.3036
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