- USD/CAD appreciates as the commodity-linked CAD struggles on declining Oil prices.
- WTI prices edge lower as rising oversupply concerns ease ongoing risks linked to Russian Oil.
- Cleveland Fed President Beth Hammack cautioned that inflationary pressures are likely to remain in place for now.
USD/CAD extends its gains for the second successive session, trading around 1.3830 during the Asian hours on Tuesday. The pair draws support as the commodity-linked Canadian Dollar (CAD) weakens on declining Oil prices, given that Canada is the largest Oil exporter to the United States (US).
West Texas Intermediate (WTI) Oil price extends its losses for the fifth consecutive session, trading around $61.90 per barrel at the time of writing. Crude Oil prices decline amid rising oversupply concerns, alleviating ongoing risks tied to Russian Oil.
Reuters reports suggest that Iraq may potentially add around 230,000 bpd to global supply by resuming crude exports through Kurdistan after a period of over two years. Additionally, Iraq has boosted oil exports under the OPEC+ framework, with September shipments projected between 3.4 and 3.45 million bpd.
The USD/CAD pair remains stronger as the US Dollar (USD) pares its recent losses from the previous session, following cautious statements from US Federal Reserve (Fed) officials on Monday. Traders will likely observe the preliminary reading of the US S&P Global PMI reports for September later in the day. US Federal Reserve (Fed) Chair Jerome Powell will also be eyed.
Traders will shift their focus toward the August Personal Consumption Expenditures (PCE) Price Index data, the Federal Reserve’s preferred inflation gauge, which is expected to signal subdued price pressures.
Fed Bank of Cleveland President Beth Hammack warned on Monday that inflation pressures will likely persist for the time being, noting challenges on both sides of the Fed’s mandate to both control inflation and support the labor market. We should exercise great caution in easing policy restrictions, as we are falling short on inflation by a more significant margin, Hammack added.
Meanwhile, Richmond Fed President Thomas Barkin noted that tariff policies tend to result in higher prices for consumers, noting that the primary point of concern for businesses remains cloudy trade policy, not high interest rates.
