USD/CAD continues on losses below 1.3550 on improved Oil prices
- USD/CAD extends its losses despite the upbeat US CPI data.
- Crude prices hold ground near-high since November; supporting the Canadian Dollar (CAD).
- US Dollar (USD) strengthened in response to an initial surge in US bond yields but later retraced its gains.
USD/CAD extends its losing streak on the fifth day, trading with a negative bias around 1.3530 during the early trading hours of the Asian session on Thursday. The pair experienced downward pressure potentially due to higher Crude oil prices.
However, the better-than-expected Consumer Price Index (CPI) data from the United States (US) provided support to limit the losses of the USD/CAD pair. US CPI (YoY) rose to 3.7% from the previous rate of 3.2%, surpassing the market consensus of 3.6% in August.
The monthly core CPI improved to 0.3% from 0.2% prior, which was expected to remain unchanged. However, the annual core rate printed the reading of 4.3% as expected from the previous 4.7% figure.
Western Texas Intermediate (WTI), Crude oil price continues the winning streak, hovering around $88.30 per barrel at the time of writing. The black gold has held a position near highs since November and continues to receive strong support due to concerns about tightening global supplies.
The tightening supply conditions are further exacerbated by the additional reductions recently declared by Saudi Arabia and Russia, the two largest oil producers globally. These cuts, scheduled for the remainder of 2023, continue to support Oil prices and strengthen the Canadian Dollar (CAD).
US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against a basket of the other major six currencies, attempts to retreat from the previous day’s gains. The spot price trades lower around 104.70.
The index experienced upward support on Wednesday due to the initial jump in US Treasury yields but later retreated, with the 10-year US bond yields settling at 4.23% by the press time.
Market participants have shifted their attention to the upcoming data releases from the US, including Core Producer Price Index (PPI) and Retail Sales for August. These datasets will provide further cues on economic activities in the US, which could help the traders strategize their bets on the USD/CAD pair.
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
