Canadian Dollar Finds Stability Amid Weakening Oil Prices and US Economic Slowdown

The Canadian Dollar has steadied amidst weakening oil prices and a softening US economy. The US Consumer Price Index (CPI) report showed moderating inflation across various goods and services, significantly cooling expectations for an aggressive Federal Reserve interest rate hike in September.

According to the Bureau of Labor Statistics, headline CPI rose 3.4% year-over-year in July, down from 3.5% in June, while core CPI increased 2.5% compared to 2.6% in the previous month, both figures aligning with market forecasts.

Market expectations for future Federal Reserve policy shifts have recalibrated following the inflation report, with interest-rate swaps pricing in a 40.1% chance of a rate hike in September and odds for an October increase dropping to around 60% from 75% previously.