US Dollar Falters as PPI Data Falls Short, Oil Prices Underpin Canadian Dollar

The US Dollar's gains against the Canadian dollar (USD/CAD) were trimmed on Thursday as the greenback lost momentum after the release of the August Producer Price Index data. Despite the data showing firmer price pressures, the US dollar failed to sustain its earlier gains.

The US PPI rose 0.4% month-on-month, matching expectations and up from 0.1% in July, while the annual rate climbed to 5.4% versus a 5.3% forecast and 4.8% previously. However, core PPI increased only 0.2% month-on-month, below the 0.3% expected.

The Canadian dollar received support from higher oil prices, with WTI trading near $97.20 a barrel, up more than 8% this week. This has led to market-implied odds of conditions returning to normal by year-end in the Strait of Hormuz falling below 30% from more than 50% previously.

The US Dollar Index traded near 98.96 after an intraday high of 99.20, while the 10-year Treasury yield was around 4.92%, its highest since November 2023.