- USD/CAD edges higher to 1.3506 amid the firmer USD.
- Investors trimmed their bets on rate cut expectations from the Fed as the US January PPI data came in hotter than estimated.
- Canada’s January CPI report will be released on Tuesday, which is estimated to ease in January.
The USD/CAD pair trades on a stronger note above the 1.3500 psychological mark during the Asian session on Tuesday. The uptick of the pair is bolstered by the stronger US Dollar (USD). The Canadian inflation data will be in the spotlight on Tuesday and could trigger volatility in the market ahead of the FOMC Minutes. At press time, USD/CAD is trading at 1.3506, gaining 0.12% on the day.
The US January Producer Price Index (PPI) data rose at the largest increase since August 2023, indicating elevated inflationary pressure in the US economy. Investors lower their bets on the interest rate cuts from the Federal Reserve (Fed) and the expectation has shifted from May to June monetary policy meeting. The Federal Reserve Open Market Committee (FOMC) minutes for January’s policy meeting could provide some outlook about interest rates trajectory.
Canada’s January Consumer Price Index (CPI) will be due on Tuesday, which is forecast to ease from 3.4% YoY in December to 3.3% in January. The Bank of Canada (BoC) highlighted the outsized role housing has played in supporting inflation, and markets do not anticipate the BoC will cut interest rates before its June monetary policy decision.
Meanwhile, the rise of crude oil might underpin the commodity-linked Loonie and cap the upside of the USD/CAD pair. It’s worth noting that Canada is the largest oil exporter to the United States (US) and the Canadian Dollar (CAD) is particularly sensitive to fluctuations in oil prices
The Canadian CPI inflation data is due later on Tuesday. If the report shows a weaker-than-expected outcome, this could weigh on the Loonie. Later this week, investors will focus on the FOMC Minutes on Wednesday, along with the Fed’s Bostic and Bowman speeches.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD: Further declines remain well in store
EUR/USD broke below the key 1.0500 support to clock a new 2024 low, always on the back of the intense strength in the Greenback, which sent the US Dollar Index (DXY) to fresh yearly peaks past 107.00 ahead of key US data releases on Friday.
GBP/USD reclaims the 1.2700 barrier and above
In line with the rest of its risk-related peers, GBP/USD leaves behind the initial drop to multi-month lows near 1.2630 and attempts a move beyond 1.2700 the figure amidst renewed weakness in the Greenback.
Gold trims early losses hovers around $2,575
The loss of momentum in the US Dollar and the retracement in US yields across the curve allow Gold prices to pick up some upside traction and revisit the $2,570 zone per ounce troy, trimming part of their early losses.
Dogecoin Price Prediction: Could DOGE turn deflationary after 100% rise? Elon Musk weighs in
Dogecoin (DOGE) is down 4% on Thursday after key figures, including Elon Musk, shared views on its token design and what a deflationary path could mean for its appeal as a currency.
Trump vs CPI
US CPI for October was exactly in line with expectations. The headline rate of CPI rose to 2.6% YoY from 2.4% YoY in September. The core rate remained steady at 3.3%. The detail of the report shows that the shelter index rose by 0.4% on the month, which accounted for 50% of the increase in all items on a monthly basis.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.