USD/CAD STRIVES TO BREAK ABOVE 1.3950 AS US DOLLAR SOARS

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  • USD/CAD aims above 1.3950 with the US Dollar strengthening on Trump’s victory.
  • Investors await the US CPI data for October and the commentary from a slew of Fed speakers.
  • The BoC is expected to cut interest rates again by 50 bps in December.

The USD/CAD pair gathers strength to break above the immediate resistance of 1.3950 in Monday’s North American session. The Loonie asset sees more upside as the US Dollar (USD) surges to a fresh four-month high, with the US Dollar Index (DXY) rising to 105.60.

The reasoning behind Greenback’s rally is the Republican Donald Trump’s victory in the United States (US) presidential elections. US fiscal deficit and inflationary pressures are expended to escalate given that Trump vowed to raise import tariffs and lower corporate taxes in election campaigns. The scenario could force the Federal Reserve (Fed) to maintain a hawkish guidance on interest rates.

This week, investors will pay close attention to the US Consumer Price Index (CPI) for October, which will be released on Wednesday and speeches from an array of Fed speakers for fresh interest rate guidance. Year-on-year headline inflation is estimated to have accelerated to 2.6% from 2.4% in September, with core CPI – which excludes volatile food and energy prices – rising steadily by 3.3%.

The impact of the inflation is expected to be weak on the Fed monetary policy action in December, unless there is a significant deviation with the consensus, as policymakers are confident about inflation remaining on track to bank’s target of 2%.



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