Photo by Michelle Spollen on Unsplash
 

• USD/CAD holds steady around 1.3815 in Friday’s early Asian session.
• US PPI rose 3.3% YoY in July, hotter than expected. 
• Traders brace for the US Retail Sales data and the upcoming meeting between Trump and Putin later on Friday.

The USD/CAD pair trades flat near 1.3815 during the early Asian session on Friday. Traders await the release of US Retail Sales and the preliminary reading of the University of Michigan Consumer Sentiment gauge, which are due later on Friday. 

Stronger-than-expected US economic data could provide some support to the US Dollar (USD) against the Canadian Dollar (CAD). The US Producer Price Index (PPI) rose 3.3% on a yearly basis in July, compared to the 2.4% increase recorded in June, the US Bureau of Labor Statistics reported Thursday. This reading came in better than the estimation of 2.5% by a wide margin. 

Meanwhile, the annual core PPI climbed 3.7% in the same period, up from 2.6% in the previous reading. On a monthly basis, the PPI and the core PPI both increased by 0.9%. The US Initial Jobless Claims for the week ending August 9 fell to 224K. This figure was lower than the previous week of 227K (revised from 226K) and below the consensus of 228K. 

Nonetheless, Thursday’s US economic data did not upset the case for a September rate cut from the US Federal Reserve (Fed). Traders still see a Fed rate reduction on September 17 as a near certainty, according to LSEG data.

Traders will closely monitor the upcoming meeting between US President Donald Trump and Russian President Vladimir Putin in Alaska later on Friday to discuss the Ukraine issue. Trump on Wednesday warned that Russia will face “very severe consequences” if Putin doesn’t agree to end the war in Ukraine during their meeting on Friday. 

The uncertainty surrounding US-Russia peace talks could provide some support to crude oil prices in the near term. This, in turn, could underpin the commodity-linked Loonie. It’s worth noting that Canada is the largest oil exporter to the US, and higher crude oil prices tend to have a positive impact on the CAD value.

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