• USD/CAD turns sideways near 1.3570 after correcting from a three-week high of 1.3623.
• Investors await the US PPI for August and the weekly Initial Jobless Claims data.
• Sticky US core inflation cements Fed smaller rate cut prospects.

The USD/CAD pair trades in a tight range near 1.3570 in Thursday’s European session after falling from a three-week high near 1.3620 on Wednesday. The Loonie asset could recover sooner as the US Dollar (USD) trades close to a fresh weekly high, with the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trading near 101.80.

The outlook for the US Dollar has improved as investors see the Federal Reserve (Fed) starting to reduce interest rates gradually. For the past few weeks, traders have been split over whether the Fed will deliver 25-basis points (bps) or a 50-bps interest rate cut in September. The United States (US) Consumer Price Index (CPI) data for August, released on Wednesday, showed signs of stickiness in inflationary pressures, which forced traders to pare Fed sizeable interest rate cut bets.

In today’s session, investors will focus on the US Producer Price Index (PPI) data for August and the Initial Jobless Claims for the week ending September 6, which will be published at 12:30 GMT.

Meanwhile, the Canadian Dollar (CAD) has come under pressure amid growing speculation that the Bank of Canada (BoC) will cut interest rates again this year. Investors seem to be confident that the BoC will extend its policy-easing cycle as the Canadian labor market conditions continue to deteriorate. August job data showed that the Unemployment Rate rose to 6.6%. The BoC has already reduced its key borrowing rates by 75 basis points (bps) to 4.25% this year.