Fading Fed rate hike bets and elevated crude prices weigh on the USD while bolstering the commodity-linked Canadian dollar.
The USD/CAD pair remains range-bound near a four-week low during Thursday’s Asian session, trading just below the mid-1.4000s. The US dollar languishes near its lowest level since June 18, pressured by softer US inflation data and reduced Fed rate hike expectations.
Wednesday’s data showed the US Producer Price Index fell 0.3% in June, following a revised 0.6% rise in May. This follows a weaker-than-expected Consumer Price Index report on Tuesday, further dampening Fed tightening bets. Meanwhile, crude oil prices hover near one-month highs amid escalating US-Iran tensions and Middle East supply disruptions.
The Bank of Canada’s cautious stance is offset by strong oil prices, which continue to support the Loonie. The geopolitical standoff and supply risks keep energy-driven inflation concerns alive, though the broader bias for USD/CAD remains negative.