• USD/CAD retreats slightly on Wednesday as investors digested cooler-than-expected U.S. producer inflation data boosted bets on a September interest-rate cut by the Federal Reserve.
• U.S. producer prices unexpectedly dropped in August, as trade services margins narrowed and goods costs rose modestly, indicating businesses may be absorbing some import tariffs.
• The Labor Department reported Wednesday that the Producer Price Index for final demand fell 0.1% in August, following a downwardly revised 0.7% rise in July.
•Recent U.S. economic data, including a weaker-than-expected nonfarm payrolls report and BLS downward revisions, have fueled speculation of a more aggressive Fed rate cut in September..
• Short-term interest rate markets currently price in a 25-basis-point cut on September 17, with further easing expected by December.
• Immediate resistance is located at 1.3860(38.2%fib), any close above will push the pair towards 1.3929(23.6%fib).
• Support is seen at 1.3818(SMA 20) and break below could take the pair towards 1.3799(38.2%fib).
Recommendation: Good to buy around 1.3820, with stop loss of 1.3750 and target price of 1.3900
