USD/CAD Holds Below 1.3800 as Oil Prices Rise Ahead of U.S. Inflation Data
The USD/CAD currency pair stayed just below 1.3800 after gaining for three days in a row. The Canadian dollar (CAD) got some support from rising oil prices, with crude oil trading around $63.50 per barrel. This boost came after the U.S. delayed tariffs on China, which improved market sentiment.
However, the Canadian dollar faced pressure after Canada’s job market showed weakness. The country lost 40,800 jobs in July, raising the chances that the Bank of Canada (BoC) may cut interest rates soon. Currently, there is a 36% chance of a rate cut in September, up from 17% earlier in the month.
At the same time, the U.S. dollar (USD) gained strength ahead of important U.S. inflation data expected later today. The Consumer Price Index (CPI) is forecasted to rise by 0.2% for July, with the yearly inflation rate likely hitting 2.8%. Core inflation, which excludes food and energy prices, is also expected to increase by 0.3%.
Traders are watching this inflation report closely because it could influence the Federal Reserve’s next moves on interest rates. Oil prices and U.S. economic data will continue to be the main drivers for the USD/CAD pair’s price changes.
Impact:
If U.S. inflation comes in higher than expected, the USD may strengthen further, pushing USD/CAD above 1.3800. On the other hand, weak Canadian jobs data and possible BoC rate cuts could weigh on CAD, increasing volatility in the forex market.
