USD/CAD bounces up from lows but remains on the defensive below 1.3700

• The Canadian Dollar loses ground with Oil prices coming down from highs.
• -The US Dollar remains on the defensive as US data boosts hopes of Fed easing.
• Today's focus is on the US PPI to confirm the CPI's moderate inflation trend.

The US Dollar is posting a mild recovery against its Canadian counterpart on Thursday's European trading session. The pair bounced up from one-week lows, with the CAD losing ground as Oil prices ease, but maintains its broader bearish trend intact, with bulls capped well below the 1.3700 level so far.

The Canadian Dollar's rally lost steam on Thursday, with Oil prices retreating from two-month highs. The US Benchmark WTI Oil appreciated 5% rally on Wednesday, as the frictions between the US and Iran threatened to disrupt crude supply from the already volatile region, which acted as a tailwind for the Loonie.

Fed cut hopes are weighing on the USD

The pair had dropped to levels close to the 20-month low at 1.3634 hit earlier this month, weighed by the skeptical market reaction to the US-China trade deal and soft US CPI figures, which boosted hopes that the Federal Reserve will cut rates again in September.
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Markets sighed with relief on Wednesday after US CPI data revealed that consumer inflation grew at a slower-than-expected pace in April, despite the tariff turmoil. Monthly inflation accelerated 0.1% with the yearly rate growing at a 2.4% pace, below market expectations of 0.2% and 2.5% readings, respectively.

Investors will be attentive to the US PPI release to confirm the moderate inflation trends, but, so far, hopes of Fed easing in September have increased, with futures markets pricing a nearly 60% chance of a 25 bps cut, from about 50% last week.