Canadian Dollar Update – Canadian dollar waiting for US CPI

• US inflation expected to rise
• Trump extends China tariff pause until November 9
• US dollar opens on a slightly firmer note

USDCAD open 1.3791, overnight range 1.3772-1.3798, close 1.3780, WTI 64.13, Gold 3345.98

The Canadian dollar is a tad softer after a quiet overnight session with traders content to await today’s US inflation report. Risk sentiment improved slightly after Trump delayed the imposition of his tariffs on China for ninety days which then shifted the focus to economic data and interest rates.

WTI crude edged up, holding between $63.76 and $64.34. The market found some support after Trump granted a 90-day extension to the pause on China tariffs. He has also warned of fresh duties on Chinese purchases of Russian crude, with reports of Beijing shifting away from Saudi supply toward Russian barrels potentially adding to tensions.

US CPI is forecast to climb to 2.8% y/y from 2.7% in the prior month, while the more closely watched Core-CPI is projected to edge up to 3.0% from 2.9%. A stronger-than-expected print could dampen the odds of a September rate cut, but any such reaction is likely to be short-lived. Several more inflation indicators, including the Fed’s preferred Core-PCE Price Index, will be released before the September 17 FOMC meeting, and any one of them could revive expectations for easing.

Asian equity markets finished in positive territory. Japanese stocks rallied after traders returned from a long weekend, responding to the extension of China tariff relief by pushing the Topix 1.39% higher. Australia’s ASX 200 gained 0.41%, and Hong Kong’s Hang Seng advanced 0.25%.

EURUSD traded in a 1.1601-1.1629 range, slipping on caution ahead of US inflation data and a weaker ZEW Survey reading. Survey results indicated tepid sentiment toward the EU–US trade agreement and fading optimism for Eurozone growth prospects.

GBPUSD moved between 1.3421 and 1.3472, spiking to the high after headline UK employment data but easing to 1.3458 once the details were reviewed. The economy added 105,000 jobs in the three months to June, but the numbers failed to clarify whether the Bank of England will opt for a rate cut or hold steady.

USDJPY traded in a 148.02-148.47 band and was sitting at the top end in New York ahead of the US inflation release. Market participants appeared unfazed by last week’s Bank of Japan remarks suggesting rates could rise if growth and inflation accelerate.

AUDUSD drifted near the bottom of its 0.6490-0.6526 range in early New York. The Reserve Bank of Australia lowered its cash rate to 3.60% as expected, citing easing inflation pressures. Officials left the door open to another cut on September 30, noting forecasts for underlying inflation to trend toward the 2–3% midpoint, with policy expected to ease gradually. July’s NAB Business Conditions Index fell to 5 from 9, while Business Confidence improved to 7 from 5.