USD/CAD flat lines around mid-1.3900s; looks to Canadian inflation data for fresh impetus

USD/CAD continues with its struggle to gain any meaningful traction amid mixed cues.
Softer Crude Oil prices undermine the Loonie and act as a tailwind for the currency pair.
A subdued USD price action caps the pair ahead of Canadian consumer inflation figures.

Haresh Menghani FXStreet

The USD/CAD pair extends its sideways consolidative price move heading into the European session on Tuesday and currently trades around mid-1.3900s, nearly unchanged for the day. Moreover, the mixed fundamental backdrop warrants some caution before placing aggressive directional bets.

Crude Oil prices struggle to attract any meaningful buyers as a US sovereign downgrade by Moody’s seems to have dampened the economic outlook for the world’s biggest energy consumer. Adding to this, mixed Chinese macro data released on Monday weighs on the black liquid, which is seen undermining the commodity-linked Loonie and acting as a tailwind for the USD/CAD pair.

Meanwhile, a potential breakdown in the US-Iran nuclear talks has weakened prospects of more Iranian oil supplies and acts as a tailwind for Crude Oil prices. This, along with subdued US Dollar (USD) demand amid bets that the Federal Reserve (Fed) will cut interest rates further in 2025, contributes to capping the USD/CAD pair as traders keenly await Canadian consumer inflation figures.

Last week's softer-than-expected release of the US Consumer Price Index (CPI) and the Producer Price Index (PPI) pointed to signs of easing inflation in the US. Adding to this, the disappointing US monthly Retail Sales data increased the likelihood of several quarters of sluggish growth. This might force the Fed to stick to its policy easing bias and fail to assist the USD to gain any positive traction.

Meanwhile, Canada's headline Consumer Price Index (CPI) is seen decelerating sharply to the 1.6% YoY rate from 2.3% in the previous month, which, in turn, will back the case for further rate cuts by the Bank of Canada (BoC). The market reaction to a stronger print, however, is likely to be limited amid persistent uncertainty around US President Donald Trump's reciprocal tariffs.

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by Statistics Canada on a monthly basis, represents changes in prices for Canadian consumers by comparing the cost of a fixed basket of goods and services. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.

AUD/USD falls to near 0.7100 after slipping below 50-day EMA

AUD/USD depreciates after registering minor gains in the previous day, trading around 0.7120 during the Asian hours. The technical analysis of the daily chart shows the pair consolidating sideways within a rectangle pattern, as neither bulls nor bears gain control. The AUD/USD pair is holding a slight bearish tone however as it sits beneath both the nine-day and 50-day EMAs.

Japanese Yen edges up but remains close to the 160.00 intervention threshold

The Japanese Yen edges up against the US Dollar on Friday, but the USD/JPY pair remains above 159.90 at the time of writing, unable to put a significant distance from the 160.00 level, considered the limit of tolerable JPY weakness for Japanese authorities.

Gold returns to the red, awaits US NFP

Gold price is looking to test the weekly lows, while in the red near $4,450 in the early European session on Friday. The precious metal remains vulnerable amid ongoing geopolitical turmoil. Traders will closely monitor the developments surrounding the US-Iran peace deal and the US May employment report later on Friday.

Arthur Hayes' “Holy Trinity” is dead: Exits Zcash after Orchard Pool exploit

Arthur Hayes has entirely dumped his “Holy Trinity” holdings by offloading his Zcash holdings on Friday. The privacy coin is down 13% so far on Friday, extending Thursday’s 26% decline after an Orchard Shielded Pool audit revealed a critical vulnerability that allowed the undetectable minting of fake coins. Hayes continues to hold Worldcoin ahead of the upcoming SpaceX Initial Public Offering, on the chance of a “high-beta proxy” rally.

Nonfarm Payrolls set to show stable labor market in May as markets digest Fed hawkish shift

The United States Bureau of Labor Statistics will release the Nonfarm Payrolls data for May on Friday at 12:30 GMT. Investors expect NFP to rise by 85K following the surprisingly strong 185K and 115K increases recorded in March and April, respectively.

Recession on paper: What really moves the Canadian Loonie now?

Statistics Canada handed the headline writers a gift and the analysts a headache. Real GDP shrank 0.1% on an annualized basis in the first quarter, and with the fourth quarter of 2025 revised down to a 1.0% contraction, that is two negative quarters in a row, the textbook definition of a technical recession and Canada's first since the pandemic.