Cooling US inflation data reduces bets on aggressive Fed tightening, weakening the USD against the CAD in early trading.
The USD/CAD pair declined to around 1.3910 in early European trading Friday, as the US Dollar weakened against the Canadian Dollar. Cooled US inflation data eased expectations for further aggressive Federal Reserve rate hikes, pressuring the USD.
Prior to the move, the pair had traded near 1.3950, reflecting stronger Fed rate hike bets. The shift follows recent US economic prints suggesting inflationary pressures may be moderating, reducing urgency for further tightening.
Markets are now pricing in a less hawkish Fed trajectory, supporting the CAD against the USD.