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- USD/CAD maintains its position as traders adopt caution ahead of the delayed US Consumer Price Index report.
- Fed’s Waller said that with inflation still elevated, policymakers can afford to be patient and delay policy easing.
- The commodity-linked CAD faces headwinds as Oil prices decline, despite escalating geopolitical tensions.
USD/CAD holds position after registering modest gains in the previous session, trading around 1.3790 during the Asian hours on Thursday. The US Dollar (USD) holds ground from market caution ahead of the release of the delayed US Consumer Price Index (CPI) report due later in the day, which is expected to provide further insight into how price pressures are evolving.
Federal Reserve (Fed) Governor Christopher Waller, who is under consideration to become chair of the central bank, reiterated his dovish stance on interest rates during a CNBC forum. “Because inflation is still elevated, we can take our time – there’s no rush to get down. We can steadily bring the policy rate down toward neutral,” Waller said.
The CME FedWatch tool suggests that Fed funds futures are pricing an implied 75.6% chance of a hold in rates at the US central bank’s next meeting in January, up from nearly 74% a week ago.
The USD/CAD pair may gain ground as the commodity-linked Canadian Dollar (CAD) faces challenges amid declining Oil prices. West Texas Intermediate (WTI) trades lower near $56.00 per barrel at the time of writing. However, the downside of the Oil prices could be restrained amid rising geopolitical tensions.
The United States (US) has ordered a complete halt to maritime traffic involving sanctioned Oil tankers traveling to and from Venezuela. At the same time, Washington is pushing for stricter sanctions on Russia’s energy sector to support peace negotiations over Ukraine, fueling worries about possible disruptions to global supply.
