The Canadian Dollar weakens as traders await US CPI and PPI reports to gauge the Fed’s next policy moves.
The USD/CAD pair rose to 1.3930 in early Asian trading, recovering from a three-day slide that pushed it to a June 10 low near 1.3915. The move lacks strong momentum as markets await today’s US Consumer Price Index and Thursday’s Producer Price Index for clues on Federal Reserve policy direction.
Recent crude oil gains, driven by Middle East tensions and attacks on Red Sea vessels, support the commodity-linked Canadian Dollar. However, concerns over inflation resurgence due to higher energy prices may limit the Loonie’s upside. Fed rate expectations remain a key driver for USD demand.
Traders are cautious ahead of the data, balancing geopolitical risks and monetary policy signals. The pair’s near-term direction hinges on whether inflation figures reinforce or challenge the Fed’s current stance.