By Ketki Saxena
Investing.com -- The Canadian dollar was little changed against the greenback on Friday after hotter than expected Producer Price Index (PPI) indicated lingering inflation concerns, boosting the case for further rate hikes from the US Federal Reserve, and supporting the USD.
Producer Prices increased by 0.3% month-over-month in July, compared to analyst expectations for a 0.2% increase.
Following the release, bets of a Fed hike stood at 30%, compared to a 25% chance prior to the data release - however the consensus is for the Fed to remain on hold at its next meeting in September.
The Canadian dollar meanwhile was supported by crude prices, on track for their longest weekly gaining streak since early 2022, after the (IEA). warned that global inventories could fall sharply over the rest of 2023.
Meanwhile, the Bank of Canada's rate hike path remains less certain, with analysts divided between the Canadian central bank has another rate hike in the cards.
Analysts at Commerzbank (ETR:CBKG) are amongst those calling for at least one more rate hike, noting that "Persistent wage pressures and stubbornly high core inflation argue for a continued active BoC."
On a fundamental level for the Canadian dollar, Commerzbank analysts "continue to see moderate CAD recovery potential against the USD in the medium term. The CAD should benefit if the interest rate differential between the Fed and the BoC narrows or turns positive in the medium term."
On a technical level for the pair, analysts at Forex.com note "For next resistance beyond 1.3500, there’s a prior resistance-turned-support swing at 1.3568, after which a key Fibonacci level re-enters the picture at 1.3652."
"On the support side of the matter, if that higher-low is not already in-play, there’s another spot of support potential around the Fibonacci level at 1.3338 which spans down to the prior swing low of 1.3321 to create a zone of interest"