USD/CAD climbs to near 1.3900 as Canadian inflation cools down

USD/CAD rises to near 1.3900 as the Canadian CPI grew at a moderate pace in March.
The BoC is expected to keep interest rates unchanged at 2.75% on Wednesday.
The intensifying US-China trade war has kept the US Dollar on the backfoot.

Sagar Dua FXStreet

The USD/CAD pair jumped to near 1.3900 during North American trading hours on Tuesday as Statistics Canada reported that inflationary pressures cooled down in March.

The headline Consumer Price Index (CPI) rose at a slower pace of 2.3%, compared to estimates and the prior release of 2.6%. Month-on-month CPI grew moderately by 0.3% against expectations of 0.7% and the former reading of 1.1%. Softer Canadian CPI data is expected to jeopardize market expectations that the Bank of Canada (BoC) will keep interest rates steady at 2.75% in the monetary policy meeting on Wednesday.

This would be the first interest rate meeting of the BoC since June, in which the central bank will keep interest rates on hold.

Investors will also pay close attention to BoC Governor Tiff Macklem’s press conference to get cues about how the tariff policy of United States (US) President Donald Trump will shape the economic and monetary policy outlook.

Meanwhile, the US Dollar (USD) strives to gain ground after a three-day losing spree. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, gauges bids near the three-year low of 99.00.

The Greenback faced an intense sell-off in the last few trading days on escalating fears that the trade war between the US and China will be painful for the domestic economy. The tit-for-tat tariff fight between the world’s largest powerhouses is expected to slow down business activities in the US. The US is incapable of securing substitutes for Chinese goods on an immediate basis, which could impact the functioning of the supply mechanism. Such a scenario will boost inflationary pressures as business owners will be forced to raise prices to maintain the demand-supply equilibrium.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

EUR/USD remains offered near 1.1650

EUR/USD rapidly left behind Monday’s optimism, slipping back to the mid-1.1600s amid the intense recovery in the Greenback. US inflation data remained well above the Fed’s target in December, although consumer prices lost some momentum, reinforcing the view of further Fed rate cuts in the upcoming months.

GBP/USD attempts some consolidation around 1.3430

GBP/USD trades on the back foot at the end of the NA session on Tuesday, hovering around the 1.3430 zone against the backdrop of the resumption of the buying interest in the Greenback. Moving forward, the BoE’s Taylor and Ramsden are due to speak on Wednesday.

Gold turns negative below $4,600

Gold gives back early gains on Tuesday after printing fresh record highs above $4,630 per ounce, easing back below the $4,600 mark amid humble losses for the day. The pullback comes amid the stronmger Greenback and despite US Treasury yields heading south.