USD/CAD RISES TOWARD 1.3800 AHEAD OF US RETAIL SALES DATA

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  • USD/CAD appreciates due to the fading likelihood of further bumper rate cuts by the Fed.
  • CME FedWatch Tool indicates a 92.1% probability of a 25-basis-point rate cut in November, with no anticipation of a 50-basis-point reduction.
  • The Canadian Dollar faces challenges September’s inflation data have reignited expectations for a 50-basis-point rate cut by the BoC.

USD/CAD gains ground due to solid US Dollar (USD), which could be attributed to the fading likelihood of further bumper rate cuts by the Federal Reserve (Fed) following strong US labor and inflation data. The USD/CAD pair trades around 1.3770 during the early European hours on Thursday.

Market expectations are leaning toward a total of 125 basis points (bps) in rate cuts by the US Federal Reserve (Fed) over the next year. According to the CME FedWatch Tool, there is a 92.1% chance of a 25-basis-point rate cut in November, with no expectation of a larger 50-basis-point reduction.

Traders await the US Retail Sales data, scheduled to be released later in the day. Expectations are for monthly consumer spending to increase by 0.3% in September, up from 0.1% in the previous reading.

The Canadian Dollar (CAD) is under pressure as Canada's latest inflation report for September has reignited expectations for a 50 basis point rate cut by the Bank of Canada (BoC) next week. The annual inflation rate dropped to 1.6% in September, the lowest since February 2021, falling below the central bank's 2% target.




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