The USD/CAD pair is trading lower as the Canadian Dollar (CAD) is benefitting from higher Oil prices. Canada, being the largest Oil exporter to the US, sees support for its currency from the rise in crude Oil prices. The West Texas Intermediate (WTI) Oil price is on the rise, currently around $82.20 per barrel, following softer-than-expected US Consumer Price Index (CPI) data for June. This has sparked speculation of a potential Federal Reserve (Fed) rate cut in September, which could boost the US economy and in turn increase demand for Oil.
In other news, Chicago Fed President Austan Goolsbee believes the US economy is on track to achieve 2% inflation. This has led to talks of a possible interest rate cut by the Fed in the near future. Meanwhile, in Canada, the Unemployment Rate rose to 6.4% in June, with the economy losing 1,400 jobs. This has raised expectations of further interest rate cuts by the Bank of Canada (BoC) to stimulate economic growth.
Traders are keeping an eye on upcoming economic data releases, such as the Michigan Consumer Sentiment Index and US Producer Price Index (PPI) data, to gain further insight into the US economy. Additionally, May’s Building Permits (MoM) in Canada will be closely watched for any impact on the Canadian Dollar. Key factors influencing the CAD include interest rates set by the BoC, Oil prices, the health of the economy, inflation, and the Trade Balance.