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USD/CAD holds near 1.3940 as weaker US dollar offsets oil declines
The latest US inflation data cooled expectations for an aggressive September Fed hike, while falling oil prices weighed on the Canadian dollar.
The Canadian dollar held steady versus the US dollar, with USD/CAD trading around 1.3940 during Thursday’s Asian session after registering minor gains the previous day, FXStreet reported. The pair moved within a narrow range as a softer US dollar offset the impact of declining oil prices, which typically pressure the commodity-linked CAD.
FXStreet said the greenback faced headwinds after July US CPI came in below the prior month, with headline CPI up 3.4% year over year versus 3.5% in June, and core CPI up 2.5% year over year versus 2.6%. The data landed in line with market forecasts and reduced expectations for a more aggressive Federal Reserve rate hike in September.
According to FXStreet, CME FedWatch data showed rate hike odds for September were priced at about 40.1%. Odds for an October increase dropped to around 60% from 75% the prior day, while the next potential hike was not fully priced until December.
FXStreet also attributed CAD pressure to weaker oil sentiment, citing declines tied to downward revisions to global demand forecasts for 2026. OPEC cut its 2026 world oil demand growth projection to 580,000 barrels per day, and the International Energy Agency forecast a 1.6 million bpd contraction in consumption this year, down from its prior estimate of 1 million bpd.