USD/CAD bulls take control on hotter than expected US CPI
13.10.2022, 13:29

USD/CAD bulls take control on hotter than expected US CPI

  • USD/CAD bulls break key week and month highs.
  • US CPI comes in hot and sends markets lower.

USD/CAD rallied to 1.3977 on the back of hotter-than-expected US inflation data in a highly anticipated Consumer Price Index report. The pair has rallied from a low of 1.3777 on the day and is currently 1.00% higher. The DXY index, which measures the greenback vs. a basket of currencies spiked to 113.92 with 114.80 on the radar, a touch above the September 28 highs. 

US CPI comes in hot

The data arrived as follows:

  • US CPI (MoM) Sep: 0.4% (est 0.2%; prev 0.1%).
  • US CPI (Y0Y) Sep: 8.2% (est 8.1%; prev 8.3%).
  • US CPI Core (M0M) Sep: 0.6% (est 0.2%; prev 0.6%).
  • US CPI Core (Y0Y) Sep: 6.6% (est 6.5%; prev 6.3%).

Once again, hotter-than-expected US inflation numbers for both the core and headline measures are not seen as good news for the Federal Reserve or the US economy and US stocks don't like it. The S&P500 CFD is down some 2% ahead of the cash open at the top of the hour and gathering bearish momentum. The US short-term interest-rate traders see about a one-in-ten chance of a 100-basis point fed rate hike in November, up from zero before the CPI report. Consequently, Wall Street could be a bloodbath in the open and that is set to weigh on high beta currencies such as the dollar block, including CAD. 

USD/CAD technical analysis 

The bulls have burst through the week and month highs which could be expected to act as support on a retest. 

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