USD/CAD Stays Firm as Fed Rate Hikes Offset Oil Gains

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: November 11, 2026

Key Moments

USD/CAD trades around 1.4190 in Asian hours on Wednesday, extending its advance for a second straight session.
US CPI and Core CPI for October both top forecasts, reinforcing expectations for a December Federal Reserve rate hike with about a 91% implied probability.
WTI crude trades near $85.70 per barrel, lending some support to CAD even as easing US-Iran tensions threaten to cap oil gains.

USD/CAD Supported by Firm Dollar After CPI Upside Surprise

USD/CAD continues to edge higher for a second consecutive session, trading close to 1.4190 during Asian market hours on Wednesday. The pair is drawing support from a stronger US Dollar following the latest US inflation release, which has reinforced expectations that the Federal Reserve will raise interest rates in December.

Market pricing tracked by the CME FedWatch Tool now reflects roughly a 91% chance of a rate hike next month, underscoring the hawkish tilt in policy expectations.

Inflation Data Strengthens Case for Further Fed Tightening

The US Consumer Price Index increased 0.4% month-over-month in October, exceeding the 0.3% consensus forecast, though it moderated from September’s 0.6% rise. Core CPI, which excludes food and energy, climbed 0.3%, in line with September’s pace and above the 0.2% estimate.

The Bureau of Labor Statistics did not publish annual inflation figures for October, citing last year’s government shutdown as the reason for the omission.

Indicator	Period	Actual	Forecast	Previous
Headline CPI (m/m)	October	0.4%	0.3%	0.6%
Core CPI (m/m)	October	0.3%	0.2%	0.3%

Safe-Haven Bid for USD Eases on Hopes of US-Iran De-escalation

Despite the supportive inflation backdrop, the US Dollar may see some pressure from waning demand for safe-haven assets as investors grow more confident about a possible diplomatic solution to the US-Iran standoff.

US President Donald Trump indicated that “further military strikes against Iran might no longer be necessary,” while US Secretary of State Marco Rubio stated at a G7 gathering that major combat operations were no longer required. At the same time, Congressional Democrats are considering leveraging the upcoming government funding deadline to encourage the administration to pursue a peaceful path.

Oil Price Recovery Offers Counterweight to USD Strength

Gains in crude oil are providing some offsetting support to the Canadian Dollar, potentially limiting upside in USD/CAD. West Texas Intermediate (WTI) has advanced after two consecutive sessions of declines and is trading around $85.70 per barrel at the time of writing.

However, crude prices could face renewed downside if signs of easing geopolitical risk in the Middle East persist. US President Donald Trump suggested that additional military action against Iran may no longer be needed, which has boosted expectations for a negotiated outcome. In parallel, Congressional Democrats are weighing the use of the looming government funding deadline as leverage to press the administration to move toward ending the conflict.

Fed Communication Turns Sharply Hawkish, Backing Dollar Strength

Comments from Fed policymaker Goolsbee have reinforced a more hawkish policy stance and supported the Dollar. The FXS Speechtracker score for his latest remarks stands at 8/10, well above the 6.8/10 historical average, highlighting elevated concern about persistent inflation.

Goolsbee stressed that the latest CPI report was “borderline disturbing,” that services inflation is “not coming down,” and that there is “a real inflation issue” that the Fed is “going to have to deal with,” while characterizing the labor market as “steady and stable.” This mix of enduring price pressures and a solid jobs backdrop signals readiness to tighten further if necessary and argues against near-term policy easing.

The FXS Fed Sentiment Index increased by 1.69 points to 145.61, indicating that the overall policy tone remains firmly hawkish and well above the neutral 100 threshold. Together with the elevated FXS Speechtracker reading, this move suggests markets should continue to discount a higher-for-longer rate profile, typically supportive for the Dollar and negative for risk-sensitive currencies such as the Canadian Dollar.