Canadian Dollar Slides on Strong US PMIs and Weak Oil

The Canadian Dollar slipped against the US Dollar on Friday as strong US PMIs and weak Oil prices weighed on the CAD. The USD/CAD traded around 1.4095, up a modest 0.06%, with the US Dollar retaining a slight advantage following the release of solid US economic data.

According to S&P Global's Composite Purchasing Managers Index (PMI), the US economy accelerated in July, signaling private sector activity growth of around 2% in the third quarter. The Services PMI improved to 53.6, while the Manufacturing PMI eased slightly to 53.8 from 53.9.

However, in Canada, Friday's data pointed to renewed weakness in producer prices, with the Industrial Product Price Index falling 1.4% MoM in June and the Raw Material Price Index dropping 6.9%, well below market expectations.

The weaker-than-expected Canadian inflation data adds to expectations that the Bank of Canada (BoC) could maintain a more accommodative policy stance than the Federal Reserve (Fed). Lower Oil prices also continue to cap support for the Canadian Dollar.