Photo by Michelle Spollen on Unsplash

The Canadian Dollar (CAD) took a step lower on Thursday, driven down by a broad-market upswing in the US Dollar (USD). United States (US) Producer Price Index (PPI) inflation for July was the key driving headline, trimming bets of when the Federal Reserve’s (Fed) next rate-cutting cycle would begin.

Canadian economic releases still remain almost entirely absent from the data docket this week, leaving Greenback flows firmly in the driver’s seat. The Bank of Canada’s (BoC) latest meeting minutes showed the Canadian central bank begrudgingly admit the Canadian economy may not be in a place that requires further rate cuts. This comes after the BoC’s latest rate cut sparked a jump in Canadian bond yields and mortgage prices.

Daily digest market movers: Canadian Dollar recedes on fresh Greenback strength

• The Canadian Dollar fell one-half of one percent against the US Dollar on Thursday.
• The USD/CAD pair has been bolstered back above the 1.3800 handle after almost two weeks of consolidation.
• US PPI inflation soared to 3.3% YoY in July, with core PPI inflation reaching a scorching 3.7% after sinking to just 2.6% in the previous period.
• Investors are once again concerned about US inflation pressures, but not enough to give up on a September Fed rate cut.
• Interest rate traders are still pricing in over 90% odds of a Fed interest rate cut on September 17, but now only see better-than-even odds of two rate cuts through the remainder of 2025, not three.

Canadian Dollar price forecast

Newfound Greenback strength has pushed the Canadian Dollar firmly onto the back foot, with USD/CAD once again trading above 1.3800. The pair is still caught in no-man’s land between the 50-day and 200-day Exponential Moving Averages (EMA), though little technical resistance lies between price action and 12-week highs above 1.3900.

USD/CAD daily chart

(Click on image to enlarge)

More By This Author:

Dow Jones Industrial Average Stumbles After PPI Inflation Soars
Canadian Dollar Churns The Waters Near Key Averages
GBP/USD Springboards Higher Heading Into A Midweek Lull