The USD/CAD pair remains stable above 1.3600 despite higher-than-expected US producer inflation data. Market speculation for Fed rate cuts in September is strong, while weak Canadian job market conditions suggest more rate cuts by the Bank of Canada (BoC).
The US Dollar Index (DXY) has declined, indicating a higher risk appetite among investors. Meanwhile, the Canadian Dollar is under pressure as expectations for BoC rate cuts mount due to poor labor market conditions.
Key factors affecting the Canadian Dollar include BoC interest rates, oil prices, the health of the economy, inflation, and trade balance. The BoC plays a significant role in influencing the CAD through interest rate adjustments. Oil prices also impact the CAD due to Canada’s reliance on oil exports. Inflation, economic data releases, and market sentiment also play a crucial role in determining the value of the Canadian Dollar.