USD/CAD steady around 1.2365 amid falling crude oil prices

• The market mood is upbeat as the US stocks indexes are in the green.
• Falling crude oil prices boost the US dollar prospects versus the Loonie.
• BoC’s Tim Macklem: Global supply chain bottlenecks are not easing, which means inflation might not be temporary as expected.

The USD/CAD is flat during the New York session is trading at 1.2362 at the time of writing. Earlier the market sentiment was downbeat due to higher inflationary pressures and central banks reducing the pandemic-era stimulus programs. However, the market mood has improved, witnessed by US stock indexes, recording gains of 0.24% and 52%, except for the Dow Jones Industrial, which is flat at press time.

Crude oil prices falls for the first time in eight days

In the meantime, crude oil prices are falling. The US benchmark crude oil Western Texas Intermediate (WTI) is losing half percent, trades at $81.55 per barrel, exerting additional pressure on the commodity-oil-linked Canadian dollar.

The US Dollar Index, a basket that measures the performance of the US dollar against six peers, declines 0.04%, sits at 93.94, whereas the US T-bond yields rise, with the 10-year note up two and a half basis points, at 1.60%.

On October 14, the Bank of Canada Governor, Tim Macklem, said that global supply chain bottlenecks “are not easing as quickly as expected,” meaning that inflation in Canada and IMF members will probably take longer than foreseen to come down.

On the macroeconomic front, the Bank of Canada’s (BoC) Business Outlook Survey (BoS) for the Q3 unveiled on Monday that the business sentiment continued to improve, with the BoS indicator hitting a record high of 4.73, compared to 3.96 in the second quarter.

According to the report, “Many businesses face supply constraints that will limit their sales and put upward pressure on their costs.” Furthermore, 45% of the companies interviewed on the survey expect the Consumer Price Index to rise above 3% over the next two years. However, half of those firms say that “drivers of higher inflation are temporary.”

In the US economic docket, the Industrial Production shrank 1.3%, worse than the 0.2% increment expected by analysts. Moreover, Capacity Utilization fell from 76.2% in August to 75.2% in September.