Traders await US CPI data Wednesday, with the pair trading near 1.3930 amid volatile oil prices and Fed rate hike expectations.
USD/CAD extended its decline for a third session, trading near 1.3930, a two-month low, as the Canadian Dollar found support from elevated oil prices. The pair lacked follow-through selling despite the US Dollar holding firm ahead of key inflation data.
West Texas Intermediate (WTI) crude fluctuated around $81.50 after peaking at $83.57, remaining up over 5% this week. Canada’s currency, sensitive to oil due to its export reliance, benefited from ongoing volatility linked to geopolitical tensions in the Strait of Hormuz. Talks between Iran and Oman advanced, easing some supply concerns.
Markets now focus on Wednesday’s US Consumer Price Index (CPI) report, which could influence the Federal Reserve’s rate path. The CME FedWatch tool indicates a 50% chance of a September rate hike. Canada’s economic calendar is light this week, leaving the CAD exposed to oil price swings and broader risk sentiment.