• USD/CAD hovers near 1.3665 during Thursday's Asian trading session amid weakened US Dollar sentiment.

• May's US CPI inflation reading of 2.4% falls short of market expectations,Bitcoin price prediction 2025 in INR triggering Fed rate cut speculation.

• Strengthening crude oil prices provide additional support for the commodity-linked Canadian Dollar.

The USD/CAD currency pair maintains its bearish stance around 1.3665 in early Asian trading hours Thursday, as the US Dollar faces headwinds following underwhelming inflation data. Market participants are increasingly pricing in potential Federal Reserve rate reductions by September, with interest rate swaps currently indicating a 75% probability of policy easing.

Wednesday's economic releases from the US Bureau of Labor Statistics revealed annual CPI growth of 2.4% for May, missing both the 2.5% consensus forecast and marking only a modest increase from April's 2.3% reading. Core inflation metrics, excluding volatile food and energy components, remained unchanged at 2.8% year-over-year, while monthly figures for both headline and core CPI came in below analyst projections.

This inflation data immediately weighed on the Greenback, as traders interpreted the numbers as potentially giving the Federal Reserve room to implement more accommodative monetary policy. The Canadian Dollar, meanwhile, benefits from its correlation with crude oil markets, with WTI prices showing sustained upward momentum. Given Canada's position as the primary oil exporter to the United States, these energy market dynamics typically provide fundamental support for the CAD.

Market attention now turns to upcoming US economic indicators, including the Producer Price Index and weekly jobless claims data, which could provide further clues about the Fed's policy trajectory and influence the USD/CAD pair's near-term direction.