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USD/CAD stalls near 1.38 ahead of US PPI and CPI data
Focus is on upcoming US inflation prints for clues to the Fed path, while higher crude prices linked to Strait of Hormuz tensions are supporting the Canadian dollar.
The USD/CAD exchange rate is consolidating just above the 1.3800 level, after failing to extend the modest gains seen the prior day, according to FXStreet.
Traders are holding off on new directional bets ahead of the US Producer Price Index release later Thursday and the US Consumer Price Index report on Friday, with the data expected to inform expectations for the Federal Reserve policy path.
FXStreet notes that traders are pricing a higher chance of borrowing-cost increases at the Fed meeting on September 15 to 16, and that persistently higher energy prices are seen as an inflation risk that could support tighter policy expectations.
The update also cites geopolitical developments in the Strait of Hormuz, where Iran attacked ships after the US said it sank Iranian tankers, raising concerns about prolonged supply disruption and lifting crude prices to a three-month high. FXStreet adds that supported US bond yields and a US Treasury buyback of up to $6 billion in 10-year to 20-year maturities have contributed to a modest US dollar uptick, but higher oil prices may cap further USD/CAD gains.
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