• Market mood is optimistic as US stock indices are in the green.
  • Falling crude oil prices are strengthening the outlook for the US dollar against the loonie.
  • BoC’s Tim Macklem: Global supply chain bottlenecks are not easing, which means inflation may not be temporary as expected.

USD / CAD is stable during the New York session and is trading at 1.2362 at the time of writing. Previously, market sentiment was depressed due to higher inflationary pressures and central banks cutting back on pandemic-era stimulus packages. However, the mood of the market has improved, as evidenced by the US stock indexes, posting gains of 0.24% and 52%, with the exception of the Dow Jones Industrial, which is stable at the time of publication.

Crude oil prices fall for the first time in eight days

Meanwhile, crude oil prices are falling. US benchmark Western Texas Intermediate (WTI) crude oil is down half a percent, trading at $ 81.55 a barrel, putting additional pressure on the oil-linked Canadian dollar.

The US Dollar Index, a basket that measures the performance of the US dollar against six peers, down 0.04%, stands at 93.94, while US T bond yields rise, the rating at 10 years increasing by two and a half basis points to 1.60%.

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

On the macroeconomic side, the Bank of Canada (BoC) Business Outlook (BoS) survey for the third quarter on Monday found that the business climate continues to improve, with the BoS indicator reaching an all-time high of 4.73, against 3.96 in the second quarter. .

According to the report, “many companies face supply constraints that will limit their sales and put upward pressure on their costs.” In addition, 45% of the companies surveyed for the survey expect the consumer price index to exceed 3% in the next two years. However, half of these companies say that “the drivers of higher inflation are temporary”.

In the US economic agenda, industrial production fell 1.3%, worse than the 0.2% increase expected by analysts. In addition, capacity use fell from 76.2% in August to 75.2% in September.

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