Canadian Dollar steadies as US inflation meets expectations, Oil limits downside
USD/CAD trades around 1.3915 on Wednesday at the time of writing, virtually unchanged on the day with a modest decline of 0.06%.
The Canadian Dollar steadied on Wednesday amid US inflation data meeting expectations and oil prices providing a downside limit. At the time of reporting, USD/CAD traded at 1.3915, unchanged for the day with a slight 0.06% decline. US inflation, measured by the Consumer Price Index (CPI), eased to 3.4% year-over-year (YoY) in July from 3.5% in June.
The core CPI, excluding food and energy components, increased by 0.2% month-over-month (MoM) and 2.5% YoY. These figures align with market expectations. The US Dollar showed limited reaction as the data provided no surprise that would alter expectations for the Federal Reserve's monetary policy. West Texas Intermediate (WTI) oil fell on Wednesday after two days of gains, though geopolitical tensions in the Middle East might cap losses in energy prices.
Recent reports suggest no discussions are ongoing for extending the ceasefire between the US and Iran, which dampens hopes for a swift de-escalation. This uncertainty, combined with attacks on vessels in the Strait of Hormuz and Bab el-Mandeb, fuels concerns in the Oil market. The Canadian Dollar could benefit from these developments, helping to contain the US Dollar's upward pressure.
Technical analysis shows USD/CAD trading below its 100-period and 200-period simple moving averages, with support at 1.3900 and resistance around 1.4000.
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