The Canadian Dollar is gaining strength as risk appetite increases. The Canadian Consumer Price Index (CPI) inflation data is set to be released on Tuesday, which is eagerly awaited by CAD traders. The price of Crude Oil is decreasing on Monday, which is limiting support for the CAD. After Friday’s risk-off bids caused the Loonie to fall against the USD, it is now experiencing a recovery. The US Retail Sales figures are also due on Tuesday, adding to the economic calendar. It is expected that Canadian CPI will remain steady, but if it beats expectations, it could lead to increased inflation expectations. The Bank of Canada’s latest Business Outlook Survey suggests that this would also benefit the CAD. The majority of Canadian consumers and businesses anticipate further rate hikes and expect a recession next year. The USD/CAD pair is currently trading below 1.3620, down from its peak in October. The 200-day Simple Moving Average near 1.3450 is the next major level of support. In terms of currency movements, the CAD is strongest against the JPY today. Overall, higher interest rates strengthen a country’s currency and lower the price of Gold. The Fed funds rate, set by the Federal Reserve, is closely monitored by markets to anticipate future monetary policy decisions.
