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USD/CAD continues to decline on higher oil prices

The USD/CAD exchange rate has lost 1.3515 for the sixth consecutive day, with the US PPI increasing by 1.7% YoY in August. Retail sales were strong, and expectations of a Fed tightening loosened slightly. The number of Jobless Claims for the second week of September was less than anticipated.

The USD/CAD exchange rate declined on Thursday, coming close to reaching 1.3510 while losing 0.30%. The strength of the CAD may be explained by increased oil prices, and the USD gauge represented by the DXY index reached new highs near 105.20.

The US dollar gained momentum after retail sales rose 0.6% MoM in August, exceeding expectations and higher than the previous 0.6%. US Treasury yields increased, with the 2-year note yielding nearly 5%, increasing demand for the US dollar.

Chances of the Federal Reserve making one final raise in 2023 decreased to around 35% from 40% in previous sessions. The focus now shifts to the decision made next week, with the markets already pricing in a pause.

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