USD/CAD Pauses at 1.3800 Ahead of US PPI Release
The Canadian Dollar (CAD) has stabilized as higher oil prices offset the USD's uptick ahead of the US Producer Price Index (PPI) release. The USD/CAD pair struggled to attract meaningful buyers on Thursday, with traders seeming hesitant and opting to wait for the PPI data before placing fresh directional bets.
The US central bank's policy path will be a key driver of the USD demand and, subsequently, the USD/CAD pair. Traders have been pricing in a greater chance that the Fed will raise borrowing costs at its meeting on September 15-16. Inflation risks stemming from persistently higher energy prices underpin prospects for immediate Fed tightening.
The escalating US-Iran tensions have fueled concerns about a prolonged disruption to supplies, lifting crude oil prices to a fresh three-month top and acting as a tailwind for the USD. Meanwhile, US bond yields remain supported as investors seem disappointed by the US Treasury's announcement that it would buy back up to $6 billion in 10-year to 20-year maturities.