USD/CAD fluctuates amid US inflation data and trade tensions

The USD/CAD currency pair has experienced volatility, trading near recent highs before pulling back toward key support levels. The pair recently reached a high near 1.3892 but faced selling pressure, retreating to trade around the 1.3861 level.

Several fundamental factors are influencing the market. In the United States, the Personal Consumption Expenditures (PCE) Price Index rose 3.7% over the 12 months through July, exceeding consensus estimates and suggesting persistent inflation. This has maintained expectations for potential Federal Reserve policy tightening. Additionally, US initial jobless claims were lower than expected at 203k, while durable goods orders for July outperformed forecasts.

On the Canadian side, the Loonie is receiving some support from crude oil prices, which remain bolstered by geopolitical risks stemming from the Russia-Ukraine war and shipping considerations in the Strait of Hormuz. However, these gains are being tempered by ongoing US-Canada trade tensions. Traders are currently monitoring technical support clusters between 1.38376 and 1.38430, as well as upcoming commentary from Federal Reserve officials at the Jackson Hole Symposium.