CAD stays near 1.3700 after decline in US inflation
Daily Currency Update
The USD/CAD pair hovered near the round-level support of 1.3700 in Wednesday’s New York session. The Loonie asset changed little after the release of the United States (US) Consumer Price Index (CPI) report, which showed that price pressures slowed expectedly in July.The Canadian dollar faced mild selling pressure as oil prices have corrected gradually after a one-way rally. Oil prices have fallen while investors look for fresh developments on conflicts between Iran and Israel in the Middle East. It is worth noting that Canada is the leading exporter of oil to the US and lower prices of black gold weighs on the Canadian dollar. Oil price trades lower again after snapping a four-day winning streak on Tuesday.
Key Movers
In Europe, the German economic sentiment indicator (ZEW), a key measure of investor confidence, dropped to 19.2 yesterday. ZEW President Achim Wambach noted that “economic expectations are still affected by a high level of uncertainty, driven by ambiguous monetary policy, sluggish growth in the Eurozone, and ongoing fears about escalating tensions in the Middle East.”In the UK, average weekly earnings rose by 5.4%, exceeding the Bank of England’s projection of 5.1%. However, total earnings growth slowed to 4.5%, falling short of expectations by 1.2%. This deceleration in wage growth could give the Monetary Policy Committee more leeway to lower interest rates at their next policy meeting.
Crucial inflation data released this morning helped lower demand for the US dollar. The US Dollar Index was down a fifth of a percent over the past 24 hours after the Consumer Price Index only increased 2.9%, the first-time inflation was below 3% since 2021. With inflation moderating, the Federal Reserve may turn attention to the labor market.
Expected Ranges
- EUR/CAD: 1.5053 - 1.5138 ▲
- GBP/CAD: 1.7063 - 1.7128 ▲
- AUD/CAD: 0.9058 - 0.9106 ▲
- USD/CAD: 1.3689 - 1.3722 ▼