Canadian Dollar gains as US inflation cools Fed October rate hike bets
USD/CAD declines 0.08% on Wednesday and trades around 1.4180 at the time of writing, after touching a daily low of 1.4155 in the wake of the US inflation data. The pair recovers part of its losses as investors reassess the timing of a potential further tightening by the Federal Reserve (Fed).
The Canadian Dollar gained against the US Dollar as inflation data from the US cooled expectations of a further Federal Reserve rate hike in October. After the US Personal Consumption Expenditures (PCE) Price Index came in unchanged at 3.4% in August, lower than the 3.7% expected, investors reassessed the Fed's timing for tightening monetary policy.
The softer-than-anticipated inflation figures contributed to a stronger economic backdrop, with the US private sector adding more jobs than anticipated in September and annualized GDP growth for the second quarter revised higher. As a result, markets now assign a 37% chance of a rate hike in October, down from nearly 51% a day earlier.
This shift in expectations weighed on the US Dollar, causing it to lose 0.21% to trade around 101.20, while the Canadian Dollar rebounded from its daily low of 1.4155.
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