Canadian dollar works to hold steady

Key Movers

The US Dollar Index weakened by 0.45% in the past 24 hours to the 103.77 level. The USD/CAD pair also exhibited a subdued performance below the round-level resistance of 1.37 so far this morning. The USD continued to weaken as investors anticipate the Federal Reserve reducing interest rates in the September meeting. Fed Governor Christopher Waller communicated confidence over the moderation in the job market and inflation. When asked about rate cuts, Waller said, “I do believe we are getting closer to the time when a cut in the policy rate is warranted.”

The EUR/USD pair reached a four-month high near 1.0950 this morning. The pair is expected to trade cautiously with a focus on the European Central Bank’s (ECB) monetary policy meeting, which is scheduled for Thursday. The ECB is expected to leave interest rates unchanged.

The UK's Office for National Statistics reported in the European morning that annual inflation, as measured by the change in the Consumer Price Index (CPI), held steady at 2% in June. The core CPI rose 3.5% in the same period, while the Retail Price Index increased 2.9%. All these figures were in line with analysts' estimates. The GBP/USD pair edged slightly higher but remained below the 1.30 level with the immediate reaction.

The USD/JPY pair was sharply down this morning by around 1.3% to 156.49. Markets continued to suspect another intervention after Japan’s authorities intervened in the market and pushed the yen away from the lowest levels in nearly four decades. Although comments from top officials were not clearly pointing to intervention, the size and pace of the latest move suggested that authorities continued to buy the yen to further strengthen the weakening currency.