USD/CAD oscillates in a narrow band above 1.3500, eyes on US, Canadian GDP data

The USD/CAD pair oscillates in a narrow trading band of 1.3495–1.3515 during the early Asian session on Tuesday. Investors await the fresh catalysts from the incoming economic data this week. The US and Canadian Gross Domestic Product (GDP) will be released on Wednesday and Thursday, respectively. The pair currently trades around 1.3507, adding 0.01% on the day. 

The Federal Reserve (Fed) Chairman Jerome Powell said last month that the central bank wants to gain more confidence that inflation is on a sustainable path down to the 2% target before lowering the interest rate. Additionally, the FOMC minutes indicated that several policymakers were worried about the risks of moving too quickly on rate cuts. The dovish remarks from Fed officials and a data-driven approach weigh on the US Dollar (USD) and act as a headwind for the USD/CAD pair. 

On the Loonie front, the Canadian CPI inflation data eased more than expected to 2.9% in January. The report triggered speculation of an early interest rate cut from the Bank of Canada (BoC). The BoC's next monetary policy meeting is scheduled for March 6, and investors anticipate the rate will stay on hold at 5.0%. However, the markets have priced in 58% odds of a rate cut in the April meeting, a rise from a 33% chance before the CPI data were published.

On Tuesday, the US Durable Goods Orders, Consumer Confidence, and Richmond Fed Manufacturing Index are due. Also, the Fed’s Michael Barr is set to speak later in the day. The US and Canadian GDP for Q4 will be the highlights this week. This event could trigger volatility in the market and give a clear direction to the USD/CAD pair.