Thursday, June 12, 2025 7:40 PM EDT
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- USD/CAD remains under selling pressure around 1.3600 in Friday’s early Asian session.
- US PPI rose 0.1% MoM in May, softer than expected.
- Rising oil prices amid geopolitical risks could support the commodity-linked Loonie.
The USD/CAD pair edges lower to near 1.3600, its lowest since October 2024, during the early Asian session on Friday. Broad US Dollar (USD) weakness, driven by softer-than-expected US inflation data and a repricing of Federal Reserve (Fed) policy, acts as a headwind for the pair. The advanced US Michigan Consumer Sentiment will take center stage later on Friday.
Data released by the Bureau of Labor Statistics on Thursday showed that the US Producer Price Index (PPI) rose 0.1% MoM in May, compared to a decline of 0.2% (revised from -0.5%). This reading came in softer than the expectation of a 0.2% rise. Excluding food and energy, the core PPI also increased 0.1% MoM in May versus -0.2% prior (revised from -0.4%), below the consensus of 0.3%.
US Treasury yields and the Greenback declined after the PPI reports as investors boosted odds the US central bank will cut rates later this year. The Fed is anticipated to leave its policy rate in the 4.25%-4.50% range at the June meeting. However, traders now expect a 25 basis points (bps) rate cut by September, with another such move likely in October. Before Thursday's PPI data, traders projected the Fed to wait until December to deliver a second rate cut.
Meanwhile, a rise in Crude Oil prices amid escalating geopolitical tensions in the Middle East might boost the commodity-linked Loonie. US and Israeli officials said an Israeli attack on Iran could come within days, according to the Wall Street Journal late Thursday. 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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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...
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