USD/CAD inter-market: More downside in play ahead of Canadian CPI

USD/CAD is on a declining trend so far this week, largely on the back of ongoing bullish momentum in oil prices, which has a positive impact on the Canadian dollar. Canada is highly dependent on oil exports for its revenues.

The selling pressure behind the USD/CAD pair accelerated yesterday, after the US dollar weakened across the board on Fed’s inaction. The US central bank adopted a more cautious approach on its rate hike trajectory, in wake of persisting slack in the labor markets and lower price pressures.

Further, oil price-rally gained traction after the US EIA inventory report showed an unexpected drawdown in the crude reserves, while supply disruption concerns on the back of a labor strike in Norway also underpinned the black gold, thus, eventually pushing CAD higher.

Besides these fundamentals, various intrinsics such as the yield differential between the 10-year treasuries yields and its Canadian counterpart has turned in favor of the CAD, contributing to the move lower in the major today.

Focus now shifts towards the Canadian economic releases due tomorrow, including the CPI and retail sales figures, which will provide fresh direction on the CAD pair. In the meantime, the USD dynamics and oil price-action will continue to drive the USD/CAD moves.