USD/CAD bulls and bears battle at 1.38! PPI data sets off inflation alarms, retail sales tonight may determine the outcome
2025-08-15 15:39:55
The USD/CAD exchange rate held steady around 1.3800 during the Asian and European trading hours on Friday (August 15), holding onto most of Thursday's gains. The weakening of the Canadian dollar was primarily driven by the previously released U.S. Producer Price Index (PPI) data for July, which exceeded market expectations.
The U.S. dollar index (DXY), which shows the greenback against six major currencies, held steady around 98.00, holding onto most of Thursday's gains.
The PPI report showed that both the headline and core producer price index rose 0.9% month-over-month in July, far exceeding market expectations of a 0.2% increase. Market analysts believe that businesses are passing tariff costs on to consumers rather than absorbing them themselves. However, due to the continued cooling of the labor market, traders still generally expect the Federal Reserve to initiate interest rate cuts at its September meeting.
Market focus will shift to the U.S. retail sales data for July, which will be released at 8:30 PM GMT. Economists expect the month-on-month growth rate to slow to 0.5% in July, down from 0.6% in the previous month.
Meanwhile, the Canadian dollar has shown a cautious outlook. Minutes from the Bank of Canada's July monetary policy meeting, released Wednesday, showed that central bank officials discussed whether the current interest rate of 2.75% is sufficient to cushion the impact of increased US tariffs. Notably, the Bank of Canada decided to maintain its benchmark interest rate unchanged at this meeting.
(USD/CAD daily chart, source: Yihuitong)
USD/CAD is attempting to break above its 100-day moving average (currently at 1.3818) to extend its upward trend. The 14-day relative strength index (RSI) has risen near the 60 mark, a break above which would confirm renewed bullish momentum.
If the exchange rate effectively breaks through the August 1 high of 1.3880, it may open up upside space, with the targets respectively looking at the May 15 high of 1.4000 and the April 9 low of 1.4075.
On the other hand, if it falls below the support level of 1.3540, the low on June 16, it may fall to the psychological level of 1.3500 and further test the low of 1.3420, the low on September 25.
At 15:39 Beijing time, the USD/CAD exchange rate was 1.3796/98.
The U.S. dollar index (DXY), which shows the greenback against six major currencies, held steady around 98.00, holding onto most of Thursday's gains.
The PPI report showed that both the headline and core producer price index rose 0.9% month-over-month in July, far exceeding market expectations of a 0.2% increase. Market analysts believe that businesses are passing tariff costs on to consumers rather than absorbing them themselves. However, due to the continued cooling of the labor market, traders still generally expect the Federal Reserve to initiate interest rate cuts at its September meeting.
Market focus will shift to the U.S. retail sales data for July, which will be released at 8:30 PM GMT. Economists expect the month-on-month growth rate to slow to 0.5% in July, down from 0.6% in the previous month.
Meanwhile, the Canadian dollar has shown a cautious outlook. Minutes from the Bank of Canada's July monetary policy meeting, released Wednesday, showed that central bank officials discussed whether the current interest rate of 2.75% is sufficient to cushion the impact of increased US tariffs. Notably, the Bank of Canada decided to maintain its benchmark interest rate unchanged at this meeting.
(USD/CAD daily chart, source: Yihuitong)
USD/CAD is attempting to break above its 100-day moving average (currently at 1.3818) to extend its upward trend. The 14-day relative strength index (RSI) has risen near the 60 mark, a break above which would confirm renewed bullish momentum.
If the exchange rate effectively breaks through the August 1 high of 1.3880, it may open up upside space, with the targets respectively looking at the May 15 high of 1.4000 and the April 9 low of 1.4075.
On the other hand, if it falls below the support level of 1.3540, the low on June 16, it may fall to the psychological level of 1.3500 and further test the low of 1.3420, the low on September 25.
At 15:39 Beijing time, the USD/CAD exchange rate was 1.3796/98.
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