USD/CAD Bulls Focus on Long-Term US Yield Swings

By Usman Ahmed October 20, 2022, 3:56 am • Posted in Forex

The bids for the USD/CAD pair are around 1.3760, and the price is moving toward 1.3800. As market sentiment gets worse, those who like the dollar gain ground. S&P500 futures kept going down on Wednesday.

The US dollar index (DXY) has gone up to 113.10, which was its high on Wednesday, and is likely to go even higher. The yield on a 10-year US Treasury has risen to 4.15 per cent because more people think the Fed will raise rates (Fed).
The Fed’s Beige Book pointed out that rising interest rates, disruptions in the supply chain, and price pressures could lead to rising inflation and weak domestic demand. Higher car prices and loan rates have made sales of cars slow down.

Also, the economy hasn’t changed much in the big cities, and businesses have stopped hiring because they think the economy will get worse.
Charles Evans, president of the Chicago Fed, said that the US central bank “must make sure that inflationary pressures do not rise.” He thinks that the Fed should have started making money tighter six months before March 2022.

This week, people were interested in Canada’s inflation numbers. The main CPI went up from 6.8% to 6.9%. Core CPI went up from 5.6% to 6.0%.

Analysts at CIBC think that the Bank of Canada (BOC) will have to raise interest rates by 75 basis points (bps) instead of 50 bps next week.
Even though Joe Biden said that oil might release, the price of oil has gone back up to near $85.00. The rally may end sooner if the US Strategic Petroleum Reserve (SPR) releases 15 million barrels.