The USD/CAD currency pair scaled a fresh 10-week peak of 1.3814 on Tuesday ahead of the Canadian CPI report and as expectations that the Federal Reserve will likely reduce interest rates at a more modest pace kept the US Dollar supported.

Yesterday Fed Governor Christopher Waller called for “more caution” regarding future interest rate cuts.

According to Waller, recent hurricanes and a strike at Boeing would disrupt job market readings, paring monthly job gains by over 100,000 in October.

Markets are now pricing in about an 89% chance of a 25 basis point rate cut at the Federal Reserve’s policy meeting in November.

At present, only 45 basis points of rate cuts are priced in by year-end.

Meanwhile, market players will be looking into Canadian CPI inflation data for September due out later today.

The median CPI inflation probably remained steady at 2.3% in September, according to market consensus. It has been the lowest rate since April 2021.

The trimmed-mean core inflation rate, the Bank of Canada’s preferred measure of underlying inflation, probably rose to 2.5% in September from 2.4% in August. The latter has been the lowest rate since April 2021.

As of 10:25 GMT on Tuesday the USD/CAD currency pair was inching up 0.09% to trade at 1.3807.

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