Canada's Loonie Fends Off Pressure as Yields Ease, Trade Talks Progress

Canada's 10-year government bond yield fell to 3.621%, a decrease of 7.1 basis points, following the release of the US producer price index (PPI) for July.

The PPI was flat in July and cooled to 4.7% year-on-year from 5.5%, which has led to speculation that the Federal Reserve might keep its policy rate unchanged next month.

This move typically pulls down yields, reducing some of the US dollar's appeal. Despite oil prices dropping to around $81 a barrel, the Canadian dollar held steady at approximately 1.3935 per US dollar, close to Wednesday's intraday low for USD/CAD.

The trade headlines also had an impact: Ottawa said that negotiations with Washington are progressing and that the US wants a deal before the tariff deadline on August 19th, which has lowered one near-term uncertainty for cross-border business.