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USD/CAD holds around 1.3870 as oil gains and Canada inflation offset
Canada’s CPI rose 0.5% in July and the yearly rate climbed to 3.0%, supporting the Canadian dollar near the 1.3845 200-day moving average.
USD/CAD is consolidating around the 1.3870 area after bouncing from the 200-day Simple Moving Average near 1.3845, marking the pair’s lowest level since June 3, according to FXStreet. Spot prices were little changed on the day, with traders weighing competing forces from energy-linked moves in the Canadian dollar and safe-haven demand for the US dollar.
On the Canada side, Statistics Canada reported headline CPI up 0.5% in July, lifting the year-over-year rate to 3.0% from 2.8% in June, above the 2.9% market forecast. The Bank of Canada core CPI measure also rose to 2.3% year over year from 2.1%, and the monthly reading increased 0.2% after a prior 0.1% rise, which continues to underpin the Loonie, the outlet said.
FXStreet also pointed to rising crude oil prices as a key factor supporting the commodity-linked Canadian currency, even as higher oil prices can raise inflation risks that may keep the US dollar supported. The outlet cited renewed geopolitical risk, including the US-Iran standoff and President Donald Trump’s remarks about the Strait of Hormuz, as additional support for USD safe-haven demand that limits downside in USD/CAD.
Looking ahead, FXStreet said investors are watching for signals on US monetary policy, with the FOMC Minutes due on Wednesday potentially influencing the dollar’s direction, alongside further geopolitical headlines and oil price swings.
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