• USD/CAD sees more downside towards 1.3700 on multiple headwinds.
• Soft US PPI report for July has weighed on the US Dollar.
• Upbeat Oil prices have improved the Canadian Dollar’s appeal.

The USD/CAD pair appears vulnerable near 1.3730 in Tuesday’s New York session. The Loonie asset is expected to decline towards the round-level support of 1.3700 as the United States (US) Bureau of Labor Statistics (BLS) has released a soft Producer Price Index (PPI) report for July, which has weighed on the US Dollar (USD).

The report showed that headline producer inflation grew at a slower pace of 2.2% from the estimates of 2.3% and the prior release of 2.7%. Also, the core PPI, which excludes volatile food and energy prices, decelerated at a faster-than-expected pace to 2.4% from expectations of 2.7% and the former reading of 3%. This has boosted expectations that the Federal Reserve (Fed) will pivot to policy-normalization aggressively.

Soft US producer inflation data has improved investors’ risk-appetite. The S&P 500 has opened with strong gains. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls to near 103.00. 10-year US Treasury yields have tumbled to near 3.86%.