The Canadian Dollar - USD/CAD has recovered after two previous losing sessions and is trading higher, nearing the 1.3700 level during today’s Asian session. The strengthening of the US Dollar (USD) supports the USD/CAD pair, which can be attributed to the ongoing risk-on sentiment. The decline in Crude Oil prices also contributes to this movement, particularly given Canada’s position as the largest oil exporter to the United States (US).
 
Following the release of US economic data on Wednesday, the USD/CAD pair weakened. The US Producer Price Index (PPI) unexpectedly dropped by 0.5%, compared to the forecasted increase of 0.1%.
 
The annual PPI also declined from 2.2% to 1.3%. This data aligns with the weakening inflation highlighted on Tuesday, increasing the likelihood that the US Federal Reserve (Fed) will hold off on a rate hike at the December meeting.
 
On the Canadian side, the drop in Crude Oil prices provides additional support to the USD/CAD pair. West Texas Intermediate (WTI) oil is trading lower, near $76.10 per barrel at the time of writing.
 
Additionally, stronger economic data from Canada could support the Canadian Dollar (CAD). Manufacturing Sales (MoM) showed an increase of 0.4%, compared to the expected decline of 0.1% in September. Wholesale Sales also saw a month-on-month increase, rising to 0.4% from 1.8%.
 
Investors will now focus on US Weekly Jobless Claims on Thursday for further insight into the US labor market conditions. Canada’s New Housing Price Index (YoY) will also be in focus.
 
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Warning!
 
This analysis is based on fundamental and technical perspectives from trusted sources and should not be taken as advice or an invitation to trade. Always remember that this content aims to enrich readers' knowledge. Conduct independent research on forex information before using it as a reference for your trading.
 
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