USD/CAD fell nearly 0.30% on Thursday as lower US Treasury yields weighed on the US Dollar, even after firmer US data kept the prospect of further Federal Reserve rate rises in view. The pair traded near 1.4189 after dipping to 1.4169, a two-week low, as risk appetite cooled on concerns about debt-funded AI spending and flows moved towards government bonds.
US Economic Data and Rate Outlook
September producer prices beat forecasts: PPI rose 1.3% MoM and 6.3% YoY versus 0.5% and 5.3%, while core PPI increased 0.7% MoM and 5% YoY versus 0.3% and 4.4%. Retail Sales grew 0.8% after an upwardly revised 1.3% gain in August, and Initial Jobless Claims were 199K versus 200K expected, up from 198K.
Inflation, Central Bank Policy, and Canadian Context
After CPI showed headline inflation at 3.7% versus 3.6% and core at 2.6% versus 2.5%, CME FedWatch pricing implied a pause in October after September’s 25-basis-point hike and roughly a 90% chance of another move by December; Canada’s policy rate has been held at 2.25% so far this year.
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