USD/CAD corrects to near 1.3600 as US Dollar slips, strong oil prices

The USD/CAD pair corrected sharply to near 1.3600 in the early New York session. The Loonie asset faces selling pressure amid further downside in the US Dollar and expectations of more upside in the oil price due to the deepening Israel-Hamas conflict.

S&P500 opens on a moderately positive note amid improved market mood. The risk theme remains cheerful as investors are observing how things will develop in the Middle East. However, the participation of other Middle East countries in the conflict could dampen the market mood.

The US Dollar Index (DXY) corrects to near 106.00 as Federal Reserve (Fed) policymakers supported for keeping interest rates steady ahead. Fed policymakers believe that multi-year high Treasury yields are consistently putting pressure on inflation and the central bank needs to be very careful with further policy-tightening.

Going forward, investors will focus on the United States Consumer Price Index (CPI) data for September, which will be published on Thursday. As per the estimates, monthly headline and core inflation are seen expanding by 0.3%. The annual headline and core CPI are seen softening marginally to 3.6% and 4.1% respectively.

Rising oil prices are strengthening the Canadian Dollar. Escalating tensions in the Middle East are expected to keep oil prices upbeat. IMF chief economist Pierre Gourinchas said on Tuesday, that the “IMF research indicates a 10% increase in Oil prices would weigh down on global output by about 0.2% in the following year, boost global inflation by about 0.4%.”