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USD/CAD holds near 1.3915 after US inflation matches expectations
US CPI eased to 3.4% year over year in July, while oil volatility linked to US-Iran tensions helps limit downside for the Canadian dollar.
USD/CAD traded around 1.3915 on Wednesday, largely flat on the day as US inflation came in line with market expectations, according to FXStreet.
In the United States, the Consumer Price Index cooled to 3.4% year over year in July from 3.5% in June, while monthly prices rose 0.1%, after a 0.4% decline in June. Core CPI, excluding volatile food and energy, increased 0.2% month over month and 2.5% year over year, all matching expectations, leaving the US dollar with limited reason to reprice Federal Reserve rate expectations.
FXStreet added that the pair’s direction was also influenced by renewed uncertainty in the oil market. WTI fell after two straight sessions of gains as Reuters reported, citing a senior Iranian source, that there are no discussions underway to extend the ceasefire between Washington and Tehran, with Tehran viewing there is no official start date to extend.
With geopolitical risk maintaining a premium in crude and Canada tied closely to oil exports, FXStreet said the backdrop could offer some support to the Canadian dollar and help contain USD/CAD despite the relatively muted reaction to US inflation data.
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