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USD/CAD rises modestly as focus shifts to upcoming US PCE data
The Canadian dollar is pressured by lower oil prices and US-Iran diplomacy that has dragged crude to a two-week low, while markets await the US Personal Consumption Expenditures Price Index for Fed policy clues.
The USD/CAD pair edged higher in the Asian session on Wednesday, trading around the mid-1.3800s but staying within the prior day’s range, according to FXStreet. Traders are looking ahead to the US Personal Consumption Expenditures (PCE) Price Index for the next catalyst on Federal Reserve policy expectations. FXStreet said the near-term USD outlook remains constrained by diminishing odds of an immediate Fed rate hike, along with falling US bond yields and hopes for US-Iran diplomacy. The report linked the market tone to expectations that the Fed may hold policy at its September 15 to 16 meeting. Oil weakness is also weighing on the Canadian dollar, FXStreet noted, after the US offered Iran sanctions relief and signaled an end to a naval blockade in exchange for reopening the Strait of Hormuz and halting attacks by regional proxies. In addition, the deepening US-Canada trade dispute was described as another headwind for the commodity-linked loonie, after Canada announced new tariffs on US goods in retaliation for Washington’s 50% tariffs on $20 billion worth of Canadian goods. On the technical side, FXStreet reported that USD/CAD remains bearish in the near term while holding below the 100-period simple moving average on the four-hour chart near 1.3912, suggesting traders may treat that level as resistance until spot prices can break higher. The article also pointed to Bank of Canada interest rates and the price of oil as key drivers for CAD.