Canadian Dollar extends gains on high Oil prices, US Dollar weakness
- USD/CAD approaches 1.4200 after retreating from 1.4283 highs on Tuesday.
- Oil prices crawl to levels near one-month highs, providing support to the commodity-sensitive CAD.
- The US Dollar loses ground amid dovish comments by Fed's Williams and with all eyes on US CPI data.
The Canadian Dollar (CAD) appreciates for the second consecutive day on Wednesday, with Oil prices near monthly highs and the US Dollar (USD) on its back foot following some dovish Fed speak. The USD/CAD pair is trading just above the bottom of October’s trading range, in the 1.4200 area, after a knee-jerk reaction above 1.4280 on Tuesday.
The Loonie is drawing support from moderate US Dollar weakness, after the influential New York Federal Reserve (Fed) President John Williams affirmed in a Bloomberg interview that he sees no need to hike borrowing costs higher in 2027. These comments contrast with the market expectations of at least two interest rate hikes next year and have put some pressure on the Greenback.
The highlight on Wednesday is the US Consumer Price Index (CPI) report for September, which is expected to confirm that price pressures remain elevated amid the energy shock from the Middle East conflict. Later on the day, the Fed Vice Chairman of Supervision, Michelle Bowman, is due to speak and might shed some more light on the bank’s near-term monetary policy path.
Oil Prices buoy the Canadian Dollar
Meanwhile, Crude Prices keep trading higher, with the barrel of Brent crude trading a few cents below $105.00, providing support for the CAD, as Oil is Canada’s main export.
Missiles allegedly launched by the Iran-backed Houthi militias hit Saudi Aramco’s central offices in the Eastern city of Dhahran on Tuesday. These attacks follow a deadly strike on the King Khalid International Airport and an Oil refinery in Riyadh over the weekend, and boost fears of another contraction in Oil supply if the Iran war spills over into Gulf countries.
Beyond that, Iran announced a new strategy to target vessels attempting to cross the key Strait of Hormuz in an attempt to keep fuel prices at high levels to undermine US voters’ confidence in President Donald Trump ahead of the midterm elections.
Economic Indicator
Consumer Price Index (MoM)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM figure compares the prices of goods in the reference month to the previous month.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Wed Oct 14, 2026 12:30
Frequency: Monthly
Consensus: 0.6%
Previous: 0.4%
Source: US Bureau of Labor Statistics
The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
Economic Indicator
Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Wed Oct 14, 2026 12:30
Frequency: Monthly
Consensus: 3.6%
Previous: 3.4%
Source: US Bureau of Labor Statistics
The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
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