The Canadian dollar closed the North American session higher versus the US dollar. Nevertheless, the price hit a six-week low due to lower oil prices and expectations of a stronger US dollar as hawks circle over the Federal Reserve. Furthermore, the loonie slumped on Tuesday after domestic economic data showed that inflation rising at 4.7% in October, in line with market expectations.
The Canadian currency swings in the balance of differing central bank expectations, stagflation risks and geopolitical challenges between China and its competitors. The dollar index (DXY), which measures the currency against a basket of six rivals, reached its highest since mid-July 2020 on Wednesday at 96.226, but was last down 0.28% at 95.541.
Meanwhile, the analysts at ANZ Bank explained that the remarks from NY Fed President and FOMC Vice Chair John Williams that underlying inflation is broadening and picking up add weight to our assessment that the Fed is pivoting towards a more hawkish assessment of inflation.
Looking forward, we have some news coming from Canada like the ADP Non-Farm Employment Change and Foreign Securities Purchases. In the US, the Philly Fed Manufacturing Index and Unemployment Claims will be released and that will give the looney some volatility for today.
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