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The USD/CAD pair extends the decline to near 1.4335 during the early Asian session on Thursday. The US Dollar (USD) weakens after the cooler-than-expected inflation data triggered the expectation that the US Federal Reserve (Fed) could cut interest rates twice this year.
Data released by the Bureau of Labor Statistics on Thursday showed that the US Consumer Price Index (CPI) climbed 2.9% on a yearly basis in December, compared to 2.7% in November. This reading came in line with market expectations. The core CPI, which excludes volatile food and energy prices, rose 3.2% on a yearly basis in December, below the previous reading and the market consensus of 3.3%.
The softer inflation data revives the bets on Fed rate cuts this year, weighing on the Greenback. “The cooler inflation print was a sign for traders to cut some long positions in the dollar, said Joseph Trevisani, senior analyst at FX Street in New York.
On the Loonie front, a rise in crude oil prices amid a large draw in U.S. crude stockpiles and potential supply disruptions caused by new United States (US) sanctions on Russia boosts the commodity-linked Canadian Dollar (CAD). Canada is the largest oil exporter to the US, and higher crude oil prices tend to have a positive impact on the CAD value.More By This Author:USD/CAD Weakens To Near 1.4350 On Cooler-Than-Expected US PPI Inflation Data
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