Ella 
In early trading in Asia on Thursday, USD/CAD fell for five consecutive days and was trading near 1.3530, with a bearish trend. Higher crude oil prices could put downward pressure on USD/CAD.
However, better-than-expected US CPI provided support to USD/CAD, preventing USD/CAD from falling lower. The annual U.S. consumer price index rose to 3.7% in August from the previous reading of 3.2%, which was stronger than the expected 3.6%.
The monthly core consumer price index rose to 0.3% from 0.2% previously and was expected to be flat. However, the annual core inflation rate fell to 4.3% from the previous reading of 4.7%, in line with expectations.
West Texas Intermediate (WTI) crude oil prices continue their streak of gains, sitting around $88.30 at press time. The market is concerned about tightening global supply, and WTI oil prices have remained near highs since November and continue to receive strong support.
Saudi Arabia and Russia, the world’s two largest oil producers, recently announced further production cuts, further exacerbating the supply crunch. These production cuts, planned for the remainder of 2023, continue to support oil prices and boost the Canadian dollar.
The U.S. dollar index, which measures the dollar’s performance against a basket of six other major currencies, attempted to retreat from the previous day’s gains. The U.S. dollar index is trading lower near 104.70.
U.S. Treasury yields initially jumped, with the index finding upward support on Wednesday, but then fell back, with the 10-year U.S. Treasury yield closing at 4.23% at press time.
Market participants’ focus shifted to upcoming U.S. data, including core producer price index (PPI) and retail sales for August. The data will provide further signals on U.S. economic activity, helping traders make strategic bets on USD/CAD.
