- USD/CAD edges lower due to a weaker US Dollar amid improved risk appetite.
- Fed Chair Jerome Powell has anticipated for a sustained decrease in inflation, indicating less confidence in the disinflation outlook.
- The higher WTI price contributes support for the Canadian Dollar.
USD/CAD has extended losses for the second successive session, trading around 1.3640 during the Asian hours on Wednesday. The decline of the pair could be attributed to the weaker US Dollar (USD) as investors digested higher-than-expected US Producer Price Index data for April while awaiting the Consumer Price Index report scheduled for Wednesday.
The US Bureau of Labor Statistics (BLS) reported that the Producer Price Index (PPI) rose 0.5% MoM in April, surpassing the market expectations of a 0.3% increase. The producer prices have rebounded from March's contraction of 0.1%. Additionally, the Core PPI, which excludes volatile food and energy prices, also surged 0.5% month-over-month, exceeding projections of 0.2%.
Federal Reserve Chair Jerome Powell shared his views after the release of US PPI. According to a Reuters report, Powell has anticipated a continued decline in inflation and expressed less confidence in the disinflation outlook compared to previous assessments. He also highlighted that Gross Domestic Product (GDP) growth is expected to reach 2% or higher, attributing this positive forecast to the strength of the labor market.
In Canada, the Royal Bank of Canada has revised its forecast for the USD/CAD pair to 1.3700 by the end of June 2024. This adjustment is attributed to the contrasting trajectories of interest rates between Canada and the United States (US). The Bank of Canada (BoC) is anticipated to implement four consecutive rate cuts in 2024, with an additional reduction of 100 basis points (bps) in 2025. While hawkish remarks from the Fed officials suggest maintaining the higher rates for longer.
Regarding commodities, the rise in crude Oil prices could bolster the Canadian Dollar (CAD), undermining the USD/CAD pair. Canada's status as the largest oil exporter to the United States, and the largest oil consumer, contributes to this dynamic.
West Texas Intermediate (WTI) crude Oil price retraces its recent losses, trading around $78.30 per barrel during Wednesday's Asian session. The advance of the crude Oil prices could be attributed to the latest crude Oil supply update from the American Petroleum Institute (API) released on Tuesday. Additionally, concerns have arisen due to wildfires nearing Fort McMurray, which serves as the central hub for Canada's Oil sands industry, contributing approximately 3.3 million barrels per day, equivalent to two-thirds of the nation's total output.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
![EUR/USD stays below 1.1100, looks to post weekly losses](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/european-euro-coin-on-top-of-american-dollar-bill-11292130_XtraSmall.jpg)
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
![GBP/USD struggles to find a foothold, trades near 1.3150](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-157771037_XtraSmall.jpg)
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
![Gold retreats toward $2,500 ahead of the weekend](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/gold-bars-50657756_XtraSmall.jpg)
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
![Week ahead – Investors brace for NFP amid Fed rate cut speculation](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/america-back-to-work-gm178972493-25143312_XtraSmall.jpg)
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
![Easing Eurozone inflation to back an ECB rate cut in September](https://editorial.fxstreet.com/images/Macroeconomics/Countries/Europe/Eurozone_countries/Eurozone/eu-flags-flying-at-the-european-commission-building-brussels-belgium-24759579_XtraSmall.jpg)
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.