USD/CAD bulls taken out by New York traders

The Canadian dollar ended the North American day higher vs. the US dollar. However, it hit a six-week low due to weaker oil prices and prospects of a stronger US dollar as hawks circle over the Federal Reserve. Additionally, the loonie slumped on Tuesday after domestic data showed that inflation rose at 4.7% in October, in line with market expectations.

Around the North American close, the price is flat near 1.2005. It had travelled between a low of 1.2592 and a high of 1.2647. Meanwhile, the greenback moved lower from a 16-month high on Thursday as investors gauged as to whether the greenback's rally was justified.

The currency hangs in the balance of diverging central bank expectations, stagflation risks and geopolitical standoffs between China and its competitors. The dollar index DXY, which measures the currency against a basket of six rivals, reached its highest since mid-July 2020 on Wednesday at 96.226, but was last down 0.28% at 95.541.

Fed speak underpins hawkish bias

Meanwhile, the analysts at ANZ Bank explained that the remarks from NY Fed President and FOMC Vice Chair John Williams that underlying inflation is broadening and picking up add weight to our assessment that the Fed is pivoting towards a more hawkish assessment of inflation.

''Transitory advocates, including Fed chair candidates Powell and Brainard, are becoming less common and it seems inevitable the December Summary of Economic Projections will see the majority of members pencil in rate rises next year.''

''The question is by how much, and also by how much the fed funds dot plot path can steepen. The December meeting will take place against a strong acceleration in activity. Manufacturing and private consumption activities are bouncing back. The latest Atlanta Fed GDPNow index is signalling Q4 growth is running at 8.2%, up from 2.0% in Q2.''